Increased Claims Clauses in Contracts
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What is an increased claims clause?
Increased claims are specifically agreed issues where a party’s monetary liability cap is above the general cap but not wholly unlimited. It’s usually for particularly high risk scenarios, like indemnity, IP infringement, or breach of confidentiality. When agreed to as part of the contract, these types of claims would be subject to a higher liability ceiling than other disputes.
Also known as: liability carve-outs, enhanced claims, or supercap claims
What increased claims terms do most contracts have?
Based on data from more than 10,000 contracts:
5% of sales contracts in Common Paper include increased claims, while 95% do not.
Of those including increased claims:
- 88% included Breach of Privacy and Security
- 72% included Breach of Confidentiality
- 52% included An Indemnifying Party’s indemnification obligation
- 7% included Breach of Privacy and Security from Gross Negligence
- 4% included Breach of Confidentiality from Gross Negligence
Example increased claims language
Sample language from the Common Paper standard Cloud Service Agreement:
Liability Caps. Except as provided in Section 8.4 (Exceptions), each party’s total cumulative liability for all claims arising out of or relating to this Agreement will not be more than the General Cap Amount.
If there are Increased Claims, each party’s total cumulative liability for all Increased Claims arising out of or relating to this Agreement will not be more than the Increased Cap Amount.
Damages Waiver. Except as provided in Section 8.4 (Exceptions), under no circumstances will either party be liable to the other for lost profits or revenues (whether direct or indirect), or for consequential, special, indirect, exemplary, punitive, or incidental damages relating to this Agreement, even if the party is informed of the possibility of this type of damage in advance.
Risks to watch for in increased claims clauses
| ⚠️ Risk Type | Description |
|---|---|
| 🔢Incorrect Section Reference | Using only section numbers to define increased claims can create incorrect references. |
| 🧠 Poorly Defined Carve-Outs | Terms like “willful misconduct” or “data breach” may be undefined or overly broad, leading to disputes. |
| 🔍 Hidden in the Fine Print | Increased claims are often buried deep in limitation clauses, making them easy to miss during review. |
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