Why and how to limit its contractual liability. Mathias Lawyers

In the event of a breach of a contractual obligation, the other party defaulting engages his contractual responsibility. This means he will have to pay to the party aggrieved a sum intended to compensate for damages caused by its default. It is quite possible to limit its contractual liability in order to frame the consequences of a breach.

As a service provider, to limit its contractual liability allows you to control the risks to its business. Indeed, in the absence of supervision, the financial consequences of a breach of contract can be extremely costly, especially for a start-up or a SMALL SME. It should also keep in mind that the issues of liability are independent of the coverage insurance underwritten. For the customer, the limitation of the contractual liability of the other party may be an element of negotiation. For example, it is possible to agree on a limitation of liability in exchange of a reduced price for the benefit, of the faculties of termination facilitated for the client, etc Finally, the two parties can find common benefits in the framework of contractual liability. The definition of the conditions for liability, damages covered and those excluded will allow parties, in case of failure, to quickly agree on the extent of damage to compensate for and thus avoid a complex exchange that can challenge e is to give a chance to continue the contractual relationship involved. It is important to note that it is strictly forbidden to introduce clauses limiting liability in contracts with consumers. A judge will consider automatically as abusive, and will dismiss the application: it is one of the clauses presumed to be unfair so conclusive, as listed in article R- of the consumer Code. In contracts concluded between professionals, or contracts,»BB», it is possible to design the contractual liability, but this possibility is framed. In this respect, it is not allowed to limit the liability of one of the contracting parties to such an extent that the essential obligations imposed on him are emptied of their substance. For example, it has been judged in the famous case law Chronopost a, that a clause limiting the compensation payable by the company Chronopost the mere refund of transport costs paid by his client was contrary to the scope of its commitment to deliver the trick in question in a limited period of time.

This case law has been recently applied to it contracts

In a decision dated thirteen December, the judge of the Court of appeal of Reims has excluded the application of a release from liability which had, in the present case, to exclude»any and all liability of the publisher as to the results and performance of the software, which The clauses merely limiting liability are more difficult to set aside by a judge. Evidenced by two judgments of the Court of appeal of Paris, dating back to the thirteen and sixteen December. The judge said legal provisions severely limiting the liability of a service provider, giving rise to the compensation has no common measure with the actual damage suffered by the client (Court of appeal of Paris, fourteen December n° and Court of appeal of Paris, sixteen December n°). These clauses have been considered to be legal because they do not deprive the other party of compensation in the event of a breach. The sagas jurisprudential Chronopost and Faurecia have been included in the reform of the law of contracts. The limit, set by the legislator in the freedom to frame its contractual liability now extends beyond clauses limiting or exonerating the producer from liability. Article of the civil Code now states that»any clause which deprives it of its substance the essential obligation of the debtor is deemed to be unwritten». In addition, the reform of contract law has introduced an article new in the civil Code, which provides that»in a contract of adhesion, any clause that creates a significant imbalance between the rights and obligations of the parties to the contract shall be deemed unwritten. The appreciation of the significant imbalance is not about the main subject matter of the contract nor to the adequacy of the price to the delivery». Recall that an adhesion contract is defined in article of the civil Code as»one in which the terms and conditions, subject to negotiation, are determined in advance by one of the parties». It is thus important to be attentive to the drafting of clauses limiting or exonerating the producer of responsibility within the contracts. Such a clause does not have to lead to make it non-existent, the contractual obligations of one party or the other. In the framework of a contract of adhesion, it will not be possible to establish a system of limitation of liability is unbalanced, where one of the co-contractors would be liable without limitations for any type of damage while the other would be his responsibility greatly limited.

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