Desk notes · US commercial contracts · Seen on the desk
Seen on the US desk: the $100 liability cap
A US vendor agreement arrived this week with total liability capped at one hundred dollars. It is more common in US SaaS paper than you would think, and it tells you something about the vendor.
The clause read, in full: “Vendor’s aggregate liability under this Agreement shall not exceed one hundred dollars ($100).” The contract was for a $40,000-a-year integration platform. The customer — a forty-person software company — had almost signed it, because the clause was on page 23 and the sales relationship was good.
What it signals
A fixed nominal cap is not a negotiating position; nobody expects to hold it. It is usually one of three things. A template written years ago by someone who was told to “minimise liability” and never revisited. A deliberate anchor from a vendor who expects the customer to negotiate up and wants to start from zero. Or, occasionally, a vendor that has never had a customer with a lawyer.
In every case, the right response is the same, and it is not outrage.
What we did
Replaced it with the market position: a mutual cap at twelve months’ fees, standard exclusions, carve-outs for confidentiality and the IP indemnity, and a super-cap for data-protection breaches. One round. The vendor accepted the redline in two days with one change to the super-cap multiple.
The lesson is not that vendors are sneaky. It is that the clause on page 23 is where the money is, and that a customer who reads only the commercial terms will sign whatever is there.
Next step
Seen something like this on your own paper?
Send it over. Twenty minutes, marked up, explained.