Limiting or excluding
You can restrict your liability in a contract or in your terms and conditions in several ways:
- A cap: for example, at most the value of the assignment, or the amount your insurance pays out.
- Excluding types of damage: for example, indirect damage, lost profits or consequential damage.
- A time limit: a claim must be reported within a certain period.
In business contracts such a limitation is common. In principle, the parties are free to agree on it.
The limits
A limitation does not always apply. Relying on it can be set aside if that would be unacceptable by standards of reasonableness and fairness (redelijkheid en billijkheid, art. 6:248 lid 2 BW, Dutch Civil Code). According to settled case law, that is in any event the case with intent or deliberate recklessness on your part or on the part of your management.
A court also looks at the circumstances. For example: how large the damage is, how serious the mistake, whether the parties were equally strong, and whether the damage was or could have been insured.
In terms and conditions: take extra care
If the limitation is in your terms and conditions, those terms must apply first. If they were not properly provided, the other party can annul the clause. A clause can also be unreasonably onerous (art. 6:233 sub a BW).
Towards consumers there is less room. A clause that limits or excludes the business's statutory liability is presumed to be unreasonably onerous (art. 6:237 sub f BW).
How to make it stronger
- Choose a cap that is reasonable in relation to the assignment.
- Make the limitation mutual where that fits: it looks fairer and is more likely to hold up.
- Make sure your terms and conditions apply and were sent along.
- Align the cap with your insurance, if you have it.
- Write it in plain language: a clear clause is harder to challenge.