Can I negotiate the liability clause to cap damages at the contract value?
Yes, absolutely. Section 8.2 currently states unlimited liability. A standard revision would be: "Contractor's total liability shall not exceed the total fees paid under this Agreement." This is a very common and reasonable negotiation point.
What about the IP clause? Can I keep my pre-existing tools?
Section 5.1 assigns all "work product" broadly. I'd recommend adding a carve-out: "Pre-existing IP and general-purpose tools, frameworks, and libraries remain Contractor's property, with a perpetual license granted to Client for project use."