Ad Damnum Clause

From the Latin Latin: ad damnum, meaning 'to the damage' or 'for damages.'.

In one sentence

A contract section stating the maximum amount of damages one party can claim.

Plain English

An ad damnum clause is a limit on how much money one party can recover if the other party breaks the contract. It's written right into the agreement and caps the damages—the money owed for breach. This protects the breaching party from unlimited liability and gives both sides certainty about the financial risk they're taking on.

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Example

A software license agreement includes an ad damnum clause stating that if the vendor fails to provide the service, the customer can recover no more than the annual license fee ($10,000), even if the outage causes the customer $500,000 in lost business.

Used in a sentence

“The construction contract's ad damnum clause limited the builder's liability to 10% of the total project cost.”

Related terms

Expectation Damages

Money awarded to put a party in the position they would have been in if the contract had been fully performed.

Compensatory Damages

Money paid to reimburse a party for actual losses directly caused by a breach or wrongdoing.

Consideration

Something of value exchanged by each party to make a contract binding.

Material Alteration

A significant change to a contract or document that affects its meaning or enforceability.

Contract Interpretation

The process of determining what a contract's words and terms actually mean.

judgment

The court's final decision in a criminal case, determining guilt or innocence and imposing sentence.

Offer

A proposal to enter into a binding agreement on specific terms.

Acceptance

Agreeing to the exact terms of an offer, creating a binding contract.

This page is a plain-English reference and is not legal advice. Laws vary by jurisdiction and change over time. For specific situations consult a licensed attorney.