I’m being paid £2,000 for this project. Why does the contract give me unlimited liability?

You have agreed a £2,000 project fee. Then you notice a clause saying you are liable for “all losses arising from any breach”, with no visible limit. It is reasonable to ask how a short project could expose you to a much larger claim.

The fee does not, by itself, set the liability limit. Find the contract’s cap, what it covers, the exceptions and any separate indemnities. Then work out what the words could mean for this particular job before deciding whether to sign or ask for a change.

Find the whole liability structure

Search the agreement for “limit”, “cap”, “exclude”, “indemnity”, “loss”, “claim” and “insurance”. Check the main terms, schedules, order form and any document they incorporate. The key is how the clauses interact.

Do not stop at a heading called “Limitation of Liability”. A general cap can sit beside an indemnity or exception that has its own treatment. The UK government’s model guidance for university–business collaborations is one example: it discusses capped indemnities, different caps, claim-handling conditions and checking insurance together. It is specific to those model agreements, not a standard clause for every freelancer.

Compare the promise with the actual project risk

Use the project to identify who can prevent or manage each problem. For a fictional £2,000 design job, imagine the client supplies product claims and licensed images, while you prepare layouts and export files. The agreement might make you responsible for any claim connected with the finished campaign, even where the client supplied the material or controlled its approval.

That example is not a legal conclusion about who would win a dispute. It helps identify questions worth resolving:

• Which materials and instructions come from the client, and who checks them?
• Are you responsible for your own work only, or also the client’s later edits, use and distribution?
• Does an indemnity cover third-party claims, direct losses, or both?
• Can you defend or help resolve a covered claim, and must the client get your consent before admitting liability or settling?
• Could a short, low-fee job create a long-lived exposure after delivery?

The Cabinet Office’s Sourcing Playbook says central-government buyers should allocate risk to the party best able to manage it and generally should not ask suppliers to take unlimited liabilities, subject to specified exceptions. That guidance governs public-sector sourcing; it is not a rule that automatically sets the cap in your private client contract. It is a useful prompt to ask whether the proposed allocation matches who controls the risk.

Do not assume insurance makes the clause harmless

Ask your insurer or broker about the actual policy and project, especially if the contract makes you promise to cover another party’s loss. Compare the policy wording with the clause: covered activity, type of claim, insured person, limit, excess, exclusions and notification requirements. A £1 million policy limit is not the same thing as an agreement to pay no more than £1 million, and the policy might not respond to every contractual promise.

Government model guidance also says to consider insurance when deciding what liability and indemnities to give. It is a concrete reminder to compare the two documents, not confirmation that your policy covers this clause. Get a written answer from the person who advises on your policy rather than relying on a headline cover amount.

Ask for a clear change, not just “make it fair”

You could ask the client to clarify which risks the clause is meant to cover, how the cap applies to the indemnity, and who handles a third-party claim. If the deal needs an exception, name the particular risk and discuss its scope, cap and procedure. A broad exception can undo a carefully written general cap.

Adapt this fictional email to the wording you actually received:

I’m reviewing the liability terms for the £2,000 design project. Clause [number] appears to make me responsible for all losses arising from a breach, while clause [number] sets a general cap. Could you confirm whether the cap applies to the indemnity in clause [number] and identify any claims intended to sit outside it? I’d also like to clarify that each party remains responsible for materials and instructions it supplies, and agree a process for notice and control of third-party claims. Once we have that wording, I can check it against my insurance.

This is a discussion starter, not ready-made legal drafting. If the wording could expose you to a loss you could not absorb, is inconsistent across documents, or turns on a large carve-out, get advice on the actual contract and governing law before signing.

Check the legal context as well as the wording

For a UK-governed agreement, the Unfair Contract Terms Act 1977 contains controls on some exclusions and limitations of liability. Which provisions apply depends on the term, the parties and the contract context. Finding an Act that might be relevant does not tell you whether this particular wording is effective.

For a wider first pass, follow the freelance contract walkthrough and put the clause beside the project scope, client-supplied inputs and your policy. The question is not only “How much is the job worth?” It is “Which loss could this wording place on me, which part of that risk can I control, and what do the connected clauses actually do?”