Public Entity Negotiation Playbook for Liability Clauses

This guide outlines the key principles for negotiating limitation of liability clauses in vendor contracts for public entities. It emphasizes the importance of maintaining balanced risk allocation to protect public funds while ensuring compliance with statutory obligations. The document details the necessity for public entities to avoid excessive liability caps and to uphold accountability for taxpayer resources. It also discusses the need for mutuality in liability clauses, suggesting that if such clauses are permitted, they should be mutual to share similar caps and exclusions. Additionally, the guide specifies critical risks that should be carved out from liability caps, such as indemnity obligations and data security breaches. It advises on negotiating caps tied to contract value and emphasizes the importance of requiring vendors to maintain appropriate insurance coverage. The document further highlights the integrity of indemnification obligations and suggests alternatives like performance bonds and joint risk assessments to enhance risk management.