Contractual liability: the clauses that determine who pays when something goes wrong
Liability caps, exclusions, SLA in return: what gets negotiated before, never after the incident.
A supplier in default, a service that goes down, damage caused to a third party: the question of who is liable, and to what extent, is almost entirely decided by the clauses signed upfront — never after the incident.
Quick check: Analyze your contract on subblink — liability caps, exclusions, guarantees.
1. Liability cap: the figure that really matters
The problem
"The provider's total liability is limited to the amount paid over the past 12 months." An incident causing €50,000 in damages, capped at €2,400 (the amount of an annual subscription), leaves the client bearing most of the risk.
How to assess a reasonable cap
- A cap proportionate to the actual risk incurred, not just the contract amount
- A recommended minimum of 2 to 5 times the contract's annual amount for high operational-impact services
- Checking that direct damages (loss of revenue, migration costs) are covered, not just replacement service costs
What subblink detects
The presence of a liability cap and its amount, compared to the contract's overall amount when this information is available in the text.
2. Exclusions of liability: wording matters
The problem
"Indirect damages excluded" can, depending on the interpretation, exclude loss of revenue — often the most significant loss item for the client.
How to protect yourself
- Have what's covered and excluded explicitly specified, rather than relying on a general formula
- Check that "force majeure" isn't defined disproportionately (including, for example, mere "maintenance" or a "technical issue")
3. Guarantees and SLAs: the counterpart to the cap
The problem
A low liability cap becomes more acceptable if offset by precise service-level agreements (SLAs), with penalties for non-compliance.
What subblink detects
The presence of an SLA, warranty or performance commitment is flagged as a missing clause if absent and generally expected for this type of contract.
4. Liability towards third parties
The problem
A contract between two businesses can engage one party's liability towards a third party (end client, user) — a point often overlooked during the initial negotiation.
How to protect yourself
- Cross-indemnification clause (each party indemnifies the other for damages caused to a third party through its own fault)
- Verification of each party's professional liability insurance, to be requested as an annex if not mentioned
Contractual liability checklist
- Liability cap proportionate to the actual risk, not just the contract amount
- Liability exclusions worded precisely, not generally
- SLA or guarantee present as a counterpart to a low cap
- Indemnification clause towards third parties if the contract exposes them
- Professional liability insurance checked for high-risk services
FAQ: contractual liability
Is a very low liability cap always abusive?
Not necessarily — it depends on the contract price and the overall balance. A cap disproportionate to the actual risk incurred is, however, a legitimate negotiation point.
Does subblink calculate the actual damages in case of a dispute?
No. It flags the presence and level of liability clauses in the contract text. Assessing actual damages falls under expert appraisal or judicial proceedings.
Are a penalty clause and a liability cap the same thing?
No. The liability cap limits the total amount due in case of damage. A penalty clause sets a flat-rate sanction for a specific breach (delay, non-conformity), potentially revisable by a judge if manifestly excessive.
Does Swiss law regulate limitation-of-liability clauses?
Art. 100 CO in principle allows excluding or limiting contractual liability, except in case of intent or gross negligence, where any limiting clause is void.
Conclusion
Contractual liability is never negotiated as well as before signing — after the incident, positions are already locked in by the text.
Cap, exclusions, guarantees as a counterpart: three points to check systematically, whatever the contract type.