A limitation of liability is a contractual clause that frames the maximum amount or type of damage for which you are liable. In our practice, we see that many Dutch entrepreneurs work with templates that are not internationally sustainable. A good exoneration clause protects without being unreasonable. Incorrect wording leads to total nullity — precisely when you need the protection.
What is the legal problem?
A limitation of liability is only valid within statutory frameworks. Clauses that are too broad are set aside by judges, certainly in cases of intent or gross negligence. Internationally, rules vary regarding reasonableness, indirect damage, and consumed basic obligations. An unfortunate wording can render the entire limitation void and hold you liable for full consequential damages — often many times the contract amount.
What does the law say?
Under Dutch law, an exemption is valid unless contrary to reasonableness and fairness under Article 6:248 paragraph 2 of the Dutch Civil Code. In the case of intent or conscious recklessness, exclusion is in principle impossible (Supreme Court 12 December 1997, NJ 1998/208, Stein/Driessen). In general terms and conditions, the black list (Article 6:236 of the Dutch Civil Code) and grey list (Article 6:237 of the Dutch Civil Code) apply to consumers.
Under German law, far-reaching limitations in general terms and conditions are often void under Section 309 No. 7 of the German Civil Code. Under French law, Article 1170 of the French Civil Code restricts exemptions that affect the essence of the obligation. The Vienna Sales Convention (Article 6 CISG) allows parties to freely limit liability contractually.
What risks do companies face?
A clause that is too broad can be declared completely void, leaving you fully liable. An unclear clause is interpreted to the detriment of the drafter (contra proferentem principle). Foreign courts often judge more strictly than you might expect. In the case of general terms and conditions directed at consumers, exclusion from the blacklist (Article 6:236 BW) is automatically void. Consequential damages and indirect damages, in particular, pose significant risks in the absence of clarity.
Practical example from our practice
We represented a Dutch software supplier in a dispute with a Belgian client. The general terms and conditions excluded all consequential damages with a ceiling of 10,000 euros. Following a malfunction, the client claimed 800,000 euros in lost profits. Under Belgian law (Article 5.62 of the 2023 Civil Code), the judge assessed reasonableness. We successfully defended the case by aligning with industry practice and the original contract value. Result: liability limited to the ceiling. A more vaguely worded clause would have cost the supplier hundreds of thousands of euros.
What can you do?
Limit liability in layers: type of damage, total amount, and time limit. Explicitly exclude consequential and indirect damages and define those terms. Align the ceiling with the transaction value and your insured sum. Do not exclude intent and gross negligence. Combine this with complaint periods and rules of evidence. Have clauses reviewed per market by an international commercial law attorney. See also our article on How to avoid liability for indirect damages?