Been held liable, or want to cap your risk?
A limitation of liability clause only works if it was agreed before or at the time the contract was concluded and fits the loss you could actually cause.
Nederlands: Lees dit artikel in het Nederlands: Aansprakelijkheid beperken in een zakelijk contract: waar let u op?
Türkçe: Bu makaleyi Türkçe okuyun: Ticari bir sözleşmede sorumluluğun sınırlandırılması: nelere dikkat etmelisiniz?
- Signing soon? Have your contract, general terms and conditions and insurance reviewed together: a cap your policy does not cover will not help you.
- Already facing a claim? First respond on the legal basis and the calculation of the loss, not on the amount.
- Do not forget penalties, warranties and indemnities: they can override the agreed limitation.
You can often limit liability in a business contract, but a single sentence stating that you are ‘not liable for anything’ offers little certainty. A workable arrangement specifies which loss is capped, what maximum amount applies, what exceptions exist and how the provision ties in with your insurance. In addition, the clause must actually have been agreed and must hold up legally.
For self-employed professionals (zzp’ers) and SMEs, getting this alignment right is important. The fee for an assignment may be modest, while a mistake can have major consequences for the client. A failed migration, incorrect advice or a delayed installation can lead to a claim far exceeding the project price. The solution starts with a clear assignment and a deliberate allocation of risks.
What is an exemption clause
An exemption clause (exoneratiebeding) is an arrangement that excludes or limits liability. It can be a maximum amount, an exclusion of certain types of loss or a limitation to specifically described events. A provision setting a short period for making claims can also have major practical consequences, although it requires its own legal assessment.
A limitation of liability does not prevent a client from holding you liable. It is a possible defence against the extent or type of the claim. What you should have done and whether you fell short remain relevant first. A good contract therefore combines a clear scope with an arrangement for errors, remedies and loss.
The statutory basis for contractual damages is found in, among other provisions, Article 6:74 of the Dutch Civil Code (BW). Business parties may allocate risks in more detail, within the limits of the law and of reasonableness and fairness. The outcome depends partly on the nature of the assignment and the way in which the arrangement was reached.
Start with the risk of your own services
Identify which errors could reasonably occur and what their consequences would be. A copywriter, a building contractor and a software administrator have different loss profiles. For one, the main issue is repair costs; for another, business interruption, data loss or damage to property. A general model clause may therefore miss important risks.
Look not only at the greatest conceivable loss, but also at your influence over it. Who manages the back-ups, who checks the source data and who takes the final decision? If a client supplies essential information itself, a clear arrangement on checking and cooperation can help. This makes it clear which responsibility lies with which party.
Also discuss how dependent the client is. A small project may be part of a business-critical process. If you know that, it is sensible to discuss continuity, recovery options and insurance explicitly. A rate that suits limited advice may be unsuitable for an assignment in which you are in fact required to guarantee extensive business continuity.
Make sure the limitation forms part of the contract
A clause in general terms and conditions only helps if their applicability and the duty to provide them have been properly dealt with. Provide the correct version before or at the time the contract is concluded, and keep the evidence. A reference on the invoice often comes too late. If there is a conflict with the client’s purchasing conditions, it must first be established which arrangements apply.
Set out material deviations visibly in the order confirmation and establish the order of precedence of the documents. If the contract refers to unlimited liability and the terms and conditions to a low cap, a dispute may arise. A provision that you have negotiated separately must be recorded recognisably, including its final wording.
Note that a standard clause does not automatically become individually negotiated simply because it appears in the main contract. Its content and use are relevant to whether the law on general terms and conditions applies. The rules on applicability and voidability are set out in Article 6:231 et seq. of the Dutch Civil Code.
Choose a clear liability cap
A cap can be linked to a fixed amount, the fee for the assignment, the fees over a certain period or an insurance payout. Each choice has different consequences. A cap of one month’s fee may work out very differently than the parties expect in the case of an extensive annual assignment. Define, therefore, the calculation period and the relevant fee.
Specify whether the cap applies per event, per claim, per assignment or to all claims together. Also set out how related events are treated. Without that demarcation, a series of small errors may be presented as several separate claims, or, conversely, it may be unclear why different incidents of loss fall under a single ceiling.
Consider extended assignments and recurring services. Which twelve months count if the loss is discovered only later? What applies if little has been invoiced yet? A link to ‘the invoice amount’ is unclear if there are several invoices. Use a calculation that both parties can understand in advance and apply afterwards.
An insurance payout as the limit
A limitation to the amount paid out by the insurer can tie in with your cover. But what happens if no payout is made? For example, because the loss falls outside the policy, the insured capacity is incorrect or an obligation has not been complied with. A clause should deal with that situation deliberately.
An alternative or additional cap may be needed to avoid an unintended zero cap or unlimited risk. The choice is a matter of legal and commercial tailoring. The policy excess also deserves attention: is it compensated on top of the payout or counted within the cap? Write this out rather than relying on an unspoken intention.
Check the clause together with your policy and the description of your insured activities. Professional indemnity insurance and general business liability insurance do not cover the same risks. A contractual warranty or indemnity may go further than the liability that is insured. If in doubt, also have the insurer or broker look at the specific obligation.
Direct and indirect loss must be clearly defined
Many terms and conditions exclude ‘indirect loss’. Without a definition, that term does not have a fixed, self-evident meaning for every contract. Parties may, for example, have different views on repair costs, lost profit, downtime, data loss or claims from their own customers. A list of the intended categories provides more certainty.
Make clear whether reasonable costs of preventing or limiting loss and costs of establishing the cause fall within the arrangement. The costs of replacement services may also be relevant. A clause that only excludes certain types of loss may leave other loss unlimited if no general cap has been included.
Avoid contradictions. If you give a firm guarantee of availability but exclude every financial consequence of unavailability, a dispute may arise about interpretation and enforceability. Align performance arrangements, any service credits, repair obligations and liability with one another. An exception elsewhere in the contract can still break through a carefully chosen ceiling.
An indemnity can go further than ordinary liability
With an indemnity, you agree to bear certain claims by third parties. A client may, for example, require you to indemnify it against claims relating to copyright, personal data or loss suffered by an end customer. Read carefully when the indemnity applies and whether it creates a separate unlimited obligation.
Set out who handles a claim, when the other party must be informed and who may settle. An indemnity without any influence on the defence can result in you being presented with the bill for a settlement in which you could not participate. Also discuss reasonable cooperation and the avoidance of unnecessary costs.
Check whether the general liability cap also applies to the indemnity. That is not self-evident in every contract. A provision stating ‘without prejudice to all other rights’ or a separate reimbursement of all costs may change the arrangement. The coherence of the entire contract matters more than a single favourably worded clause.
Penalties, warranties and repair alongside the limitation
A penalty clause may contain an independent financial incentive. Examine whether the penalty applies instead of damages or can be claimed in addition to them. The statutory principles are set out in Articles 6:91 and 6:92 of the Dutch Civil Code, but business arrangements may deviate from them in certain respects. A liability cap does not automatically cover a penalty.
A warranty can likewise entail a broader risk than an ordinary best-efforts obligation. Anyone who guarantees that a system meets all requirements must know which requirements are meant and which exceptions exist. Do not accept a warranty covering circumstances over which you have no control without discussing the consequences.
Repair is yet another separate subject. A limitation of damages does not always mean that you no longer have to carry out repairs either. Record which procedure applies when an error is reported and how quickly it will be investigated. A workable repair process can limit loss and escalation, even if a claim ultimately falls under a cap.
A limitation of liability clause must fit your assignment, the potential loss and your insurance. Have the contract and the terms and conditions reviewed together before you sign or respond to a claim. Also include warranties, indemnities, penalties and repair obligations; these can affect the agreed limitation.
A separate penalty clause can create a financial risk of its own. Read when a business penalty is payable and can be reduced. If the claim concerns software development or implementation, use the step-by-step plan for a failed IT project.
When does a limitation not hold up
A clause can be challenged because it does not apply, was not properly provided or is unreasonably onerous. In addition, relying on it may be unacceptable according to standards of reasonableness and fairness. The relevant general standard is set out in Article 6:248 of the Dutch Civil Code.
That assessment may take into account, among other things, the seriousness of the error, the nature of the contract, the relationship between the parties, whether the clause was known and insurability. Reliance on an exclusion in the case of intent or deliberate recklessness on the part of senior management meets particularly serious objections. Word exceptions carefully, therefore, and do not count on unlimited freedom of contract.
Stricter protective rules apply to consumers. Small businesses are not automatically consumers, but their position may in certain cases affect the assessment. Article 6:235 of the Dutch Civil Code also contains restrictions on who can invoke certain grounds for annulment. A business clause must therefore be tested against the specific counterparty and transaction.
You cannot contract away every external risk
An arrangement between you and your client does not automatically bind third parties. If another party suffers loss, it must be examined on what basis that party is holding you liable and whether it is bound by a limitation. Statutory obligations towards regulators do not disappear either simply because you agree an allocation of loss with a client.
With personal data, for example, a distinction must be made between internal arrangements and the rights of data subjects under the GDPR. Mandatory rules may likewise apply in the case of product liability, professional rules or specific sector legislation. A broad sentence stating that the client ‘assumes all responsibility’ does not automatically change that statutory position.
A private limited company (bv) is no substitute for a proper risk analysis either. The legal form may affect who is liable, but it does not exclude personal liability in every situation. For that separate question, our explanation of directors’ liability is relevant.
An approach to a tailor-made clause
A business arrangement can be built from a description of the claims concerned, a clear ceiling, specified categories of loss and appropriate exceptions. For example: ‘Liability under this agreement is limited to [clearly chosen maximum and period]. For related events, [arrangement] applies. This limitation does not apply to [carefully described exceptions].’
This is deliberately not a ready-made, watertight clause. The choices between the brackets determine the legal and commercial content. Where necessary, add an arrangement for the insurance payout, policy excess, indemnities, penalties and repair. Then check whether other clauses are consistent with it.
Test the text against two or three specific scenarios. What happens with a single error causing major loss, several errors within a year and a rejected insurance claim? If the outcome is not clear, the clause is not yet finished. That scenario check helps more than simply looking for the lowest possible liability limit.
Negotiating liability
A client is more likely to understand a low limit if you can explain how it relates to the price, the nature of the work and the insurance. Discuss which risks really matter. Sometimes a higher cap for one clearly defined risk is appropriate, while a lower limit continues to apply to other loss.
Record concessions in writing. Otherwise, a deviation agreed in an email may be lost between standard terms and conditions and a contract signed later. Also check whether a higher limit affects your rate or cover. Accepting an unlimited indemnity to win a small assignment can be an unfavourable trade-off.
Make sure all contract documents are aligned
An allocation of risk is rarely contained in a single clause. The quotation may contain a cap, while a security annex promises full compensation and the purchasing conditions impose a separate indemnity. Read these texts side by side. Record which document prevails in the event of a conflict and which obligations deliberately remain outside the cap.
Take a fictitious IT service provider that agrees a liability cap but, without coordination, also signs an unlimited guarantee of uninterrupted availability. A dispute then arises about what the client was entitled to expect and which remedies apply. The problem is not solved simply by changing the word ‘liability’ in the general terms and conditions. The content of the performance, the warranties and the repair arrangements must also match what the business can deliver.
Also check how multiple errors or claims are counted. Is there one cap per event, per related series, per assignment or per contract year? For ongoing services, that can make a big difference. Define the chosen system in such a way that both parties can determine which limit applies to a specific case. An insurance policy may use different definitions from the client contract.
Have negotiated changes recorded in the final version. An email proposing a higher cap is not the same as a fully completed amendment. Keep the acceptance together with all relevant annexes; see also accepting a quotation by email or WhatsApp. If the limitation is part of standard terms and conditions, also check the rules on general terms and conditions for self-employed professionals and SMEs. This links the substantive protection to a demonstrably valid arrangement.
Frequently asked questions
Can I exclude all liability?
Do not assume so. Applicability, content and circumstances determine whether an exclusion works. Mandatory law and reasonableness and fairness may set limits. A carefully capped arrangement with appropriate exceptions is generally easier to assess than a general statement that you are never responsible.
Is a cap equal to the amount of my invoice always valid?
No. The wording and context are decisive. It must be clear which invoice or period is meant and which claims fall under the cap. The relationship between the assignment, the risk and the parties may also affect whether the clause holds up.
Does my insurance automatically cover what I promise in the contract?
No. A policy has its own conditions, exclusions and limits. Additional warranties or indemnities may fall outside the cover. Have contractual risks aligned with your insurance, therefore, and check your insured activities. Verbal reassurance is no substitute for reviewing the policy and the contract.
Does the limitation also apply to third-party claims?
Not automatically. Third parties are not automatically party to your contract. Examine the basis of their claim and any specific contractual or statutory rules. An internal indemnity allocates the risk between the contracting parties, but does not necessarily prevent a third party from holding you liable directly.
What if I have already been held liable?
Report the claim to the relevant insurer in good time and keep the complete contract file. Do not acknowledge legal liability or the extent of the loss without an assessment. Examine which obligation has allegedly been breached, which limitation applies and which repair or loss-mitigating measures are required.
Does a limitation have to be the same for both parties?
That is not required in every business contract. The risks may differ. It is advisable, however, to assess whether the arrangement is understandable and defensible and whether any asymmetry fits the respective performances. A one-sided template without any substantive consideration can cause problems in negotiations and disputes.
Have your risk allocation checked
Arslan Advocaten can review your service contract, general terms and conditions and liability clauses as a whole. Also bring relevant insurance information, so that it becomes clear which risks are covered contractually and in practice. See our corporate and commercial law assistance for businesses or contact us to discuss your contract.
Written by Onur Arslan, attorney at Arslan Advocaten. Registered in the specialisation register of the Netherlands Bar for employment law and personal injury. Content reviewed on 12 September 2026 against the statutory text on wetten.overheid.nl and the cited judgments on rechtspraak.nl.
