Seventh Circuit Court of Appeals Considers Design Professional’s Limitation of Liability Clause

Limitation of liability clauses serve to establish a contractual ceiling on the amount of damages to be awarded if a plaintiff prevails in litigation between the contracting parties. Design professionals often use these clauses because their errors or omissions could expose them to damages far in excess of their fees for a project. While these clauses are typically enforced by the courts, they are frequently the subject of legal challenges, as evidenced by a recent case heard by the US Seventh Circuit Court of Appeals involving a multi-million-dollar lawsuit against an architecture and engineering firm. The clause in this case enabled the design professional to limit damages to the amount of the fee, $70,000.