Exoneration clause

An exoneration clause is a contractual provision limiting or excluding a party’s liability. It appears as a cap at the contract value or the insured sum, as an exclusion of consequential loss, or as a short limitation period for bringing claims.

Legal basis

Such a clause is valid in principle but faces three limits. Article 6:248(2) of the Dutch Civil Code sets a clause aside where reliance on it would in the circumstances be unacceptable by standards of reasonableness and fairness; the Supreme Court held in Saladin/HBU and later in Telfort/Scaramea that the relevant factors include the degree of fault, the nature and seriousness of the loss, the relationship between the parties and insurability. Where the debtor itself acted intentionally or with conscious recklessness, reliance on the clause virtually never succeeds. Article 6:233 makes a clause in general terms voidable where it is unreasonably onerous, and Article 6:237(f) places limitation of liability towards consumers on the grey list. Article 6:236(h) renders a short limitation period against consumers unreasonably onerous outright.

How it works in practice

In commercial relationships exoneration clauses generally hold, particularly between professional parties of comparable bargaining power. Their resilience improves where the clause was negotiated, where the limit matches the cover under the liability insurance, and where the price reflects the allocation of risk. An exception for intent and conscious recklessness belongs in the clause as standard.

Where it goes wrong

Suppliers exclude all liability; the more absolute the clause, the sooner it falls. A second error is an exoneration appearing only in general terms that were not supplied in time, making it voidable. Third, the clause regularly conflicts with the liability provision in the data processing agreement.