In very simple terms, there are two methods of allocating risk in the ECC :
1. by adding or deleting compensation events. These directly impact on what is included or excluded from the Prices. If no compensation events have occurred, then just because something costs a lot more, does not mean the Prices are adjusted.
2. by choice of payment option which affects how over or under runs of cost relative to the Prices are - or are not - shared. So, in your example, if it was an option A Priced Contract, all the pain would be on the Contractor; if it was an option C target contract, then the pain would be split by the sharing formula; if it was an option E cost reimbursable, it would be on the Employer.
So can the Contractor cap his liability ? Depends on the contract he signed up to.