Limitation of Liability

What it is

If something goes wrong and OpenAI is at fault, the most you can recover from OpenAI is the greater of what you paid them in the past year or $100, and you cannot claim compensation for indirect harms like lost profits or consequential losses.

Why it matters (compliance & governance perspective)

This cap means that even if a user suffers significant harm attributable to OpenAI's services, the agreement limits the maximum financial recovery to $100 for free-tier users or the amount paid in the prior 12 months for paying subscribers, and excludes indirect or consequential damages entirely.

Consumer impact (what this means for users)

For free-tier users, the liability cap limits potential recovery to $100 regardless of the harm suffered; for paid subscribers, recovery is capped at 12 months of subscription fees. The exclusion of consequential and indirect damages further limits the types of losses that can be claimed under this agreement.

Institutional analysis (Compliance & governance intelligence)

1) REGULATORY LANDSCAPE: Limitation of liability clauses in consumer contracts may require evaluation under EU Directive 93/13/EEC on unfair terms in consumer contracts and UK consumer rights legislation, which may restrict the enforceability of liability caps that leave consumers without adequate redress for material harms. The FTC Act prohibits unfair or deceptive practices, and an extremely low liability cap in conjunction with a service that can generate harmful outputs may attract regulatory attention. Some US states have specific consumer protection statutes that limit liability cap enforceability for consumer-facing technology services. 2) GOVERNANCE EXPOSURE: High for enterprise and API customers relying on OpenAI outputs for consequential decisions. A $100 absolute floor for free-tier users is notably low relative to the range of potential harms that could arise from reliance on AI-generated content in professional or high-stakes contexts. The 'to the extent permitted by law' qualifier acknowledges that the cap may not be fully enforceable in all jurisdictions. 3) JURISDICTION FLAGS: EU and UK jurisdictions may limit enforceability of liability caps in consumer contracts, particularly where the cap is disproportionate to the harm. California and other US states with robust consumer protection frameworks may impose constraints on absolute liability limitations. Illinois and New York also present potential exposure. 4) CONTRACT AND VENDOR IMPLICATIONS: Enterprise agreements may contain different liability terms; procurement teams should confirm whether their commercial contracts with OpenAI modify or supersede this $100 cap. Organizations using OpenAI outputs in products or services they provide to others should assess their own downstream liability exposure in light of this upstream limitation. 5) COMPLIANCE CONSIDERATIONS: Legal teams relying on OpenAI services for any consequential function should assess whether the liability cap is commercially acceptable and whether contractual protections (such as indemnification clauses or service level agreements) can be negotiated in enterprise arrangements.

Applicable agencies

Applicable regulations

Provision details

Other risks in this policy

• Mandatory Arbitration Clause high
• Class Action Waiver high
• Content License for Inputs and Outputs high
• Account Termination and Service Suspension medium
• Unilateral Terms Modification medium
• Age Restriction and Minor Prohibition medium