Indemnification Cap
How indemnification cap allocates risk, which wording controls, and what to verify in the signed agreement.
- Which claims and parties use each cap?
- Are losses aggregated and are insurance or escrow proceeds credited?
- Which carveouts, baskets, survival periods, and general liability limits interact with it?
If this clause already feels aggressive in isolation, upload the full contract and see how it combines with payment terms, liabilities, and exit rights.
Analyze My ContractWhat this clause actually does
An indemnification cap sets a maximum recovery for specified indemnity claims. Caps may differ by claim type, party, representation, covenant, or fraud carveout, and may interact with insurance, escrow, and the general liability cap. Market-study medians describe a defined sample and are not an adequacy rule for a particular deal. Test the cap against the purchase price, realistic loss scenarios, credit support, and the exact claims inside or outside it.
Why people get burned by this clause
Indemnification cap can change economics, timing, control, or remedies. Its effect turns on the signed wording, related sections, transaction facts, and applicable law; a market label or isolated sentence does not settle the result.
What should make you slow down
- The document does not clearly answer: Which claims and parties use each cap?
- The document does not clearly answer: Are losses aggregated and are insurance or escrow proceeds credited?
- The document does not clearly answer: Which carveouts, baskets, survival periods, and general liability limits interact with it?
Where you usually see it
- Asset purchase agreements
- Stock purchase agreements
What the platform checks in the live contract
- Which claims and parties use each cap?
- Are losses aggregated and are insurance or escrow proceeds credited?
- Which carveouts, baskets, survival periods, and general liability limits interact with it?
What to test against your deal
- Confirm in the document: Which claims and parties use each cap?
- Confirm in the document: Are losses aggregated and are insurance or escrow proceeds credited?
- Confirm in the document: Which carveouts, baskets, survival periods, and general liability limits interact with it?
Definitions worth opening next
Clause pages that share the risk pattern
Articles that go deeper
Common questions about this clause
The signed wording, definitions, exceptions, related provisions, governing law, and the transaction facts. Review the clause in that full context rather than relying on a general benchmark.
Which claims and parties use each cap? Are losses aggregated and are insurance or escrow proceeds credited? Which carveouts, baskets, survival periods, and general liability limits interact with it?
Treat indemnification cap as a document-specific allocation of risk. Identify the trigger, scope, exceptions, procedure, and consequence, then verify consequential legal conclusions for the governing jurisdiction.
See how this clause behaves in the real contract.
The clause library gives you a starting point. Document analysis can surface relevant language, show related sections, and organize risk signals and follow-up questions for review against the source file.