(a) Yes, that's right. This case is an example of a term that limits A's liability. It sets a maximum limit of $1,000 on any damages for which A will be liable for breach of contract, whatever B's actual losses might be. Such terms will likely be enforced by the courts in the same way as other agreed terms.

Allowing the parties to determine for themselves when liability is excluded or limited is economically efficient, allowing the allocation of particular types of risk to be determined by agreement, rather than by imposing rules that may not suit the parties in particular circumstances. Such agreements also reduce the likelihood of disagreement and litigation.

For these reasons, sellers often exclude liability for representations made in the course of negotiating a contract, avoiding liability for what a salesperson might say to a buyer. Also commonly found are clauses that restrict the amount of damages payable, or that restrict liability to the replacement or rectification of faulty goods or services.