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How to Use Contract Exclusions and Limitation

Meet love song: “I would do anything for love, but I won’t do that” has surprising lessons for businesses. Sometimes it’s more important to say what we won’t do rather than what we will do. 

Seems strange right? There are three times it’s important to do so. 

Sometimes you limit your work for a client to discrete tasks. In a bankruptcy contest, the lawyer may prepare and file the bankruptcy schedules and attend the first meeting, but it may exclude litigation from her work. 

It’s important to have these specific exclusions in writing, otherwise you may be left performing work your client thought should have been included rather than the limited scope you intended. 

Another it’s important to include exclusions, is when there is some discretion or ambiguity of what the finished product will look like. If you are a book keeper, separating the financial transactions of two businesses recorded in one accounting program, what would the end product look like? It may be a good idea to specify this. 

It’s also important to specify any limitations on your liability. As an example: computers professional should disclaim liability for any damages caused by the client’s employee loading malware into the system. Regardless of how vigilant the IT consultant is, is impossible to stop every threat or every incident of employee’s stupidity. 

So that’s three examples of when you want to specify limitations, but what’s the benefit? 

Specifying known limitations help manage client’s expectations and reduces disputes, it saves a business time and money. If a client is not paying, it can jeopardize your business and litigation is expensive. 

Finally, when you have limited your work and you are been asked to do more, you can approach the client to renegotiate the cost of your services. 

Sometimes saying “I won’t do that” is a good way to avoid a legal landmine. 

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