018: Limitation of Liability: Protecting Your Creators from Excessive Risk

Summary:

In this episode, we take a deep dive into limitation of liability provisions —another key boilerplate clause that works closely with indemnification to manage financial risk in influencer contracts. We start by recapping the previous episode on indemnification and then explore what limitation of liability means, why it’s crucial for influencer talent managers, and how it can protect creators from potentially devastating financial exposure.

Join us as we discuss:

• What limitation of liability provisions are and why they’re essential for managing risk in contracts.
• How limitation of liability and indemnification clauses work together to cap liability for influencers.
• The types of damages influencers could be liable for without limitation of liability provisions and why it’s important to narrow the scope to direct, predictable damages.
• Tips for negotiating these clauses with explanatory comments, including insights from Nada Alnajafi’s book Contract Redlining Etiquette on the persuasive power of using the word “because” in redline comments.

Key Takeaways:

• Defining Limitation of Liability: This provision caps the amount of financial exposure one party has, ensuring that even if something goes wrong, liability remains manageable.
• Working with Indemnification: Indemnification shifts risk, and limitation of liability controls that risk, ensuring creators aren’t left responsible for unlimited damages.
• Narrowing the Scope of Damages: Limiting liability to direct, economic damages helps avoid unforeseen or speculative losses, which could bankrupt an influencer if left unchecked.
• Using Explanatory Comments: When making substantive changes to a contract, include clear explanations to improve the chances of acceptance. Studies show that redlines with well-reasoned comments are more likely to be accepted by the other party.

Links & Resources:

The Contract Collective™ – Join the membership for access to our AI-powered Influencer Agreement Playbook and a supportive community of influencer talent managers and creators.

Boss Contract Society – Find lawyer-drafted contract templates to protect your business and intellectual property.

Contract Redlining Etiquette by Nada Alnajafi – Learn more about effective redlining techniques to improve your negotiation skills.

Connect with Casey on LinkedIn – Stay up to date with more contract tips and insights from the entertainment and influencer marketing worlds.

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