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Understand the client's perspective
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Research the market standards
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Use a proportional approach
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Consider different scenarios and options
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Communicate clearly and confidently
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Here’s what else to consider
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When you provide staffing services to a client, you want to protect your business from potential legal claims or damages that may arise from your work. One way to do that is to include a limitation of liability clause in your contract, which sets a cap on the amount of money you can be held liable for in case of a breach, negligence, or error. However, not all clients may agree to such a clause, or they may want to negotiate the terms and conditions. In this article, we will share some effective ways to negotiate a contract that includes a limitation of liability clause, and how to balance your risks and rewards.
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- Bret L. McCabe New York, NY
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- Ritik Verma Healthcare Recruiter
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- Daniela de Moura Rodrigues Araújo Recursos Humanos | Mentora de Carreira | Consultora em RH | Headhunter | Palestrante | Escritora | LinkedIn Estratégico…
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1 Understand the client's perspective
Before you propose or accept a limitation of liability clause, you need to understand the client's perspective and expectations. What are their main concerns and objectives? How do they perceive the value and quality of your services? How much risk are they willing to take on? How do they measure the success of the project or assignment? By answering these questions, you can tailor your negotiation strategy and communicate your value proposition more effectively. You can also identify the areas where you can compromise or offer alternatives, and the areas where you need to stand firm or walk away.
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- Bret L. McCabe New York, NY
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In order to effectively negotiate a limitation of liability clause, it is of paramount importance to understand the complete scope of your Client's proposed Work, as well as the potential for exposure and loss. Additionally, the Client's remuneration must obviously also be analyzed in comparison to such potential exposure as many clauses include langauge analagous to:"...the aggregate total of Contractor's liability arising from any claims, suits, demands, damages, losses, and expenses relating to the Project, and/or this Agreement shall be limited to and in no event exceed twice the fee Contractor receives for the Project under this Agreement."As such, an evaluation and comparison between any such fee and potential exposure is key.
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- Ritik Verma Healthcare Recruiter
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Negotiating a contract with a limitation of liability clause involves understanding risks, proposing fair limits, and ensuring clarity. Prioritize open communication, explore compromise, and seek legal guidance. Strive for a balanced agreement that safeguards interests while maintaining a positive business relationship.
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See AlsoWhat is a Limitation of Liability Clause? Here’s Everything You Need to KnowImportance of LOL (Limitation of Liability) Clauses in Contracts: Tips for Contract AttorneysLimitation of Liability vs IndemnityInsightful
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Antes de iniciar a negociação, mergulhe na perspectiva do cliente. Compreenda suas preocupações e objetivos. Uma negociação eficaz começa quando ambas as partes se sentem compreendidas.
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- Toni O. Künzl Rec2Rec - Spezialist für Personalvermittlung innerhalb der Personaldienstleistungs-Branche #gernperDu
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Mein Vorgehen ist hier, wenn der Kunde nicht gleich auf meinen Rahmenvertrag/Beratungsvertrag eingehen möchte, nach einem Mustervertrag des Kunden zu fragen, um die jeweiligen offenen Punkte abzugleichen und dann gemeinsam mit dem Kunden durch zu gehen, welche Punkte ihm besonders wichtig sind und warum. Dann findet sich in 90% auch eine gegenseitige Einigung!
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- Daizee Chhimpi Director - Client Services
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One should Understand the Business Needs, Conduct a Risk Assessment. negotiation is a process of finding common ground, and effective communication is key. Both parties should feel that the final agreement strikes a fair balance between protecting their interests and fostering a positive business relationship.
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2 Research the market standards
Another important step to prepare for the negotiation is to research the market standards and benchmarks for limitation of liability clauses in your industry and region. You can use online resources, industry associations, or professional networks to find out the typical ranges, percentages, or formulas that are used to calculate the liability cap. You can also look at the relevant laws and regulations that may affect the enforceability or validity of such clauses. By doing this, you can establish your credibility and justify your position with factual data and evidence. You can also avoid asking for or accepting unreasonable or unrealistic terms that may harm your reputation or profitability.
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Conheça os padrões de mercado para cláusulas de limitação de responsabilidade em contratos similares. Essa pesquisa fornece uma base sólida para fundamentar suas propostas e alinhar expectativas.
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- Toni O. Künzl Rec2Rec - Spezialist für Personalvermittlung innerhalb der Personaldienstleistungs-Branche #gernperDu
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Hier würde ich kein Risiko eingehen...im besten Fall kennen Sie den Markt zwar schon seit ein paar Jahren und haben auch mehrere Verträge von ihren ehemaligen oder aktuellen Arbeitgeber gesehen. Wenn es aber hart auf hart kommt muss es einem Gericht stand halten. Dafür würde ich immer empfehlen zu einem Fachanwalt zu gehen oder über einen Arbeitgeberverband bzw. die Handelskammer zu gehen, welche oft aktuelle Vorlagen oder auch Fachspezialisten kennen und vermitteln.
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- Margo Christou Founder | I help life sciences companies hire executive HR + Finance talent | National network and reach
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There are typically industry and market standards that you can abide by. I recommend asking a trusted, successful fellow staffing person in your industry and region what they use in their contracts. If you are new to a region, you can usually meet people in local professional networking associations. Then stay up to date by checking back on it with people over time.
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3 Use a proportional approach
One of the most common and effective ways to negotiate a limitation of liability clause is to use a proportional approach, which means that the liability cap is based on a multiple of the fees paid by the client for your services. For example, you can propose that your liability is limited to two times the amount of your contract value, or a fixed percentage of your annual revenue from the client. This way, you can show that you are willing to share some of the risk with the client, but not more than what is fair and reasonable. You can also adjust the multiple or percentage depending on the nature and complexity of your services, and the level of exposure and potential damages.
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Proponha uma limitação de responsabilidade que seja proporcional ao escopo e valor do contrato. Isso demonstra equidade e mostra que você está comprometido com uma parceria justa.
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4 Consider different scenarios and options
Another way to negotiate a limitation of liability clause is to consider different scenarios and options that may affect the outcome of the contract and the risk of liability. For example, you can propose different caps for different types of claims, such as breach of contract, negligence, or intellectual property infringement. You can also propose different caps for different phases or milestones of the project or assignment, such as design, implementation, or testing. You can also consider excluding or including certain damages, such as direct, indirect, consequential, or punitive damages. By doing this, you can demonstrate your flexibility and creativity, and find a mutually acceptable solution that balances the interests and needs of both parties.
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Antecipe diferentes cenários e explore opções flexíveis. Esteja preparado para ajustar a cláusula com base nas necessidades específicas do cliente e nos desafios que possam surgir durante a execução do contrato.
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5 Communicate clearly and confidently
The final and most important way to negotiate a limitation of liability clause is to communicate clearly and confidently with your client. You need to explain the rationale and benefits of the clause, and how it aligns with the scope and objectives of the contract. You need to emphasize the value and quality of your services, and how you will deliver them with professionalism and diligence. You need to address any questions or concerns that the client may have, and provide relevant examples or testimonials to support your claims. You also need to listen actively and respectfully to the client's feedback and suggestions, and show your willingness to cooperate and collaborate. By doing this, you can build trust and rapport with your client, and increase the chances of reaching a favorable agreement.
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- Margo Christou Founder | I help life sciences companies hire executive HR + Finance talent | National network and reach
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Any negotiation goes better when there is clear communication, including contracts that include a limitation of liability cause. If you are clear on your "why" and take time to understand the client's "why" the outcome is more likely to feel fair to both of you.
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6 Here’s what else to consider
This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?
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