To what extent do I limit liability in my general terms and conditions?

You can significantly limit your liability in general terms and conditions with an exoneration clause, but not without limit. You can never exclude liability for intent or willful recklessness, and additional limits apply to consumers. A clause that is too far-reaching or unreasonable is void or voidable.

What is an exemption clause?

An exclusion clause is a clause by which you limit or exclude your liability. For example, you can cap compensation at the invoice amount or the insured sum, and exclude indirect or consequential damages. It is one of the most important protections in your terms and conditions.

The boundaries: intent and conscious recklessness

You cannot exclude liability for damage caused by intent or conscious recklessness — on your part or that of managers. A clause attempting to do so will not hold up on that point. However, you can limit liability for 'ordinary' errors.

Not contrary to reasonableness

Even a valid exemption clause can fail: invoking it may be contrary to reasonableness and fairness, certainly in cases of serious damage or gross misconduct. Furthermore, a clause that is unreasonably burdensome is voidable. The broader the exclusion, the greater the risk that it will be invalidated.

Pay extra attention to consumers

The black and grey lists apply to consumers: an overly broad exclusion of liability is easily unreasonably burdensome and therefore voidable. A balanced limitation — rather than a complete exclusion — holds up best.

Frequently Asked Questions

Can I completely exclude my liability?

Extensive restrictions are possible, but not for intent or conscious recklessness, and additional limits apply to consumers. An exclusion that is too broad is voidable.

To what amount can I limit myself?

For example, up to the invoice amount or the insured sum, provided that this is not unreasonably burdensome. A balanced limitation holds up best.

Does my exemption always apply?

Not necessarily: invoking it may be contrary to reasonableness in cases of serious damage or gross misconduct.

A watertight exemption clause?

Our legal experts incorporate a balanced limitation of liability into your general terms and conditions and perform a general terms and conditions scan. View our contract lawteam or schedule a free consultation.