Liability cap
A contractual limitation on the total financial liability one party can face to the other under the agreement, typically expressed as a multiple of contract fees or an absolute monetary amount. In AI vendor agreements, buyers must negotiate carve-outs from the general liability cap for regulatory-compliance and data-protection indemnities, because the default cap may be far below the actual regulatory penalty exposure.
Defined in 2 GAGE programs, which carry 2 distinct definitions of it. The wording above is taught in EU AI Act Implementation Expert.
How each discipline defines it
The same term does different work depending on who is using it. These are the definitions as each program teaches them, unedited.
A contractual limitation on the total financial liability one party can face to the other under the agreement, typically expressed as a multiple of contract fees or an absolute monetary amount. In AI vendor agreements, buyers must negotiate carve-outs from the general liability cap for regulatory-compliance and data-protection indemnities, because the default cap may be far below the actual regulatory penalty exposure.
The contractual ceiling on what a party can be made to pay, typically tied to fees paid over a defined period, sitting atop categorical exclusions (consequential damages, lost profits, lost data). It allocates the tail of the risk, and AI's correlated failures make the tail long.
Where it is taught
The exact lessons this term appears in. The first 7 topics of every program are free with a free account.
- The AI contract: the clauses that protect you when the vendor's model fails · Shipping AI and Surviving the Incident, AI Governance: Applied Mastery
- Contractual Risk Allocation with AI Vendors · Regulatory Interplay and Liability, EU AI Act Implementation Expert
Terms it appears with
Not an alphabetical neighbourhood: these are the terms taught in the same lessons, ranked by how often they appear together.