Contract Glossary
Negligence
Definition
The failure to exercise the level of care that a reasonably prudent person or business would exercise in similar circumstances. In contract law, negligence matters because it's often the standard used to determine liability when something goes wrong — did the party act carelessly, or did they meet a reasonable standard of care?
In Practice
A web development agency builds an e-commerce site but fails to implement basic security measures, and customer credit card data is stolen. The client sues for negligence — the agency owed a duty of care to follow industry-standard security practices, breached that duty by skipping basic protections, and the client suffered real financial losses as a result. Most service contracts include negligence-related clauses that define what standard of care applies and cap liability for negligent (but not grossly negligent) acts.
Example Clause
Service Provider shall perform the Services with the degree of skill and care ordinarily exercised by qualified professionals performing services of a similar nature. Notwithstanding any limitation of liability set forth herein, neither party shall limit its liability for damages arising from its own gross negligence or willful misconduct.
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Frequently asked questions about negligence
Degree of carelessness. Negligence is failing to exercise reasonable care — like a contractor who misses a building code requirement. Gross negligence is reckless disregard for safety or duty — like a contractor who knowingly uses substandard materials to save money. This distinction matters in contracts because most limitation of liability clauses cap damages for ordinary negligence but explicitly exclude gross negligence and willful misconduct.
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Create your contractThis content is for informational purposes only and does not constitute legal advice. For contracts with significant financial or legal implications, review by a qualified attorney is recommended.