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  • Intellectual property framework

    Overview

    Protection of intellectual property rights is required by the Federal Constitution and by several multilateral treaties. The main statutes in this area are federal statutes. However, in case of litigation, some matters are subject to federal jurisdiction, and others to provincial jurisdiction.

  • Commercial contract framework

    Overview

    Commercial contracts are governed by the Civil and Commercial Code. This code came into effect in 2015 and it replaces the previous separate Civil Code and Commercial Code. It is part of the federal legislation, but jurisdiction regarding its implementation and litigation resulting thereunder corresponds primarily to the provincial courts.

    The Civil and Commercial Code includes general provisions on contracts, which are applicable to all contractual transactions. These provisions govern matters such as the formation of contracts, offer and acceptance, possible subject matter of contracts, legal formalities, the legal effects of contracts, contract termination and others.

    In addition, the Civil and Commercial Code includes provisions applicable to specific types of contracts, such as sale agreements, leases, franchise agreements and agency agreements. More than 30 types of agreements are subject to specific provisions of this kind. These specially regulated agreements are thus subject to the general rules applicable to contracts –described above – and to the special rules applicable to the relevant type of agreement. Agreements that are not subject to special rules are nevertheless valid, and they are governed primarily by the general contract rules and – to the degree possible – by the rules applicable to analogous specially regulated contracts.

    Other laws include provisions on specific types of commercial contracts. For instance, the Copyright Law includes certain provisions of contracts related to software and to publishing; the Patent Law includes rules on license agreements; and the Insurance Law includes rules on insurance contracts. However, in all these specially regulated contracts, the general contract law rules included in the Civil and Commercial Code are also applicable.

    Commercial contracts with the federal or provincial governments or with other governmental entities are also governed by administrative law. Special rules on contracts with state entities have been included in federal or provincial laws, or have been developed by case law.

  • Copyrights

    Nature of right

    Copyright protects intellectual creations in all fields of science, art and literature. Article 1 of the Copyright Law includes a non-exhaustive list of possible intellectual works protected by copyright. These include, among others, literary and artistic works, music, architectural works and software.

    Copyright protects intellectual expressions, but not ideas. For example, the contents of a book in terms of sentences and other literary expressions are protected by copyright, but the creative idea underlying the book as a whole is not.

    Copyright results from the creation of an intellectual work. Registration is not necessary for copyright to exist, although it is necessary for the exercise of some rights by local authors. Upon creation of a protected work, copyright belongs to the original author or authors, who then may transfer their right, by contract or by the operation of certain legal rules.

    Copyright includes economic and moral rights. Economic rights consist, basically, in the exclusive right to use and exploit the protected work. The Copyright Law lists some of the elements of this exclusive right, such as the right to reproduce the relevant work, to market copies, to prepare derivative works or to have the work performed publicly.

    Moral rights include the so call "integrity right" – that is, the right to preserve the text, title and other contents of the work, even if property rights on such work have been assigned; the "paternity right," the author’s right to be named and identified as such together with the work; the "publication right," the right to decide whether the right will be published; and the "alteration right," the right to modify the work, even after it has been published. Moral rights belong to the author and they are generally non-assignable.

    Legal framework

    Copyright law is included in Law 11, 723, as amended. In addition, multiple laws and regulations govern matters such as related rights, publishers' rights and collective management societies.

    Argentina is part of the main multilateral international copyright agreements, such as the Trips Agreement, the Berne Convention and the Rome Convention. The provisions of these agreements are actively enforced by the courts.

    Duration of right

    The general rule is that copyright protection lasts for a term of seventy years, counted as of January 1 of the first year after the death of the author, as well as through the life of the author.

    In the case of work done through cooperation, the 70-year term is computed from the death of the last person who participated in the joint authorship of the work involved.

    In the case of posthumous works, the 70-year term is computed from the death of the author.

    The duration of protection of anonymous works whose copyright belongs to institutions, corporations or legal entities is 50 years from the date of publication of the work.

    Special rules on copyright duration apply to specific types of copyrightable works, such as photographs and cinematographic works.

    Ownership / licenses

    The basic rule is that ownership belongs to the author. Special rules have been developed in connection with special types of works, such as cinematographic works, derivative works and software.

    There are several types of joint ownership. It may apply to works done through cooperation, which imply a creative collaboration between different authors; to collective works, which are those created through the initiative or direction of one or more individuals, who coordinate or direct the efforts of several other individuals to achieve a joint result; and to composite works, which are the result of adding different separate works, each with a possible separate author and owner, into one final result.

    Works created by employees who have been hired for that purpose belong to the employer.

    Copyright may be subject to licenses, generally as part of broader contractual arrangements such as publishing agreements.

    Remedies for infringement

    Damages may be claimed before civil courts for all types of copyright violation. Registration of works is not necessary, except for local authors, whose rights may be suspended until registration takes place.

    It is also possible to file civil action to prevent further copyright violation, and to obtain preliminary remedies, such as injunction, in the course of civil procedures.

    Criminal remedies, particularly fines, are possible, but are not frequently applied.

  • Mask works / topographies

    Nature of right

    Mask works and topographies are not separately protected under Argentine law. They may be protected under patent law or by way of confidentiality.

    Legal framework

    Argentina has enacted no specific rules on chip protection. Although Argentina is part of the WTO and has approved the Trips Agreement, it has not yet implemented any rules on chip protection.

    The provisions on chip protection included in the Trips Agreement have not been deemed immediately applicable under Argentine law. In addition, Argentina has not ratified or implemented other multilateral treaties on chip protection, in particular the Treaty of Washington of 1989.

    Semiconductor technology, generally, and topographies, in particular, may be protected under the traditional intellectual property rules applicable to all types of technology, specially patent law and the rules on confidential information. Therefore, matters such as the duration of the relevant rights, ownership and remedies depend on the type of protection used in connection with each specific mask work or topography.

    Duration of right

    Not applicable for this jurisdiction.

    Ownership / licenses

     Not applicable for this jurisdiction.

    Remedies for infringement

    Not applicable for this jurisdiction.

  • Patents

    Nature of right

    Patents are a statutory right. The granting of patents is required by the Argentine Constitution and by different international documents, particularly the Trips Agreement. Patent rights imply an exclusive right to exploit a process or a product. The Argentine Patent Law defines the limits of these exclusive rights, on the basis of the provisions of the Trips Agreement.

    Legal framework

    Patents are governed by the Patent Law – Law 24,481, as amended. In addition, they are governed by the Trips Agreement and by the Paris Convention. Argentina is not a party to the Patent Cooperation Treaty.

    Duration of right

    The basic rule is that patents expire 20 years after the date in which the relevant patent application was filed. Argentina uses a "first to file" system, but it also applies the priority rules derived from the Paris Convention.

    Argentine law provides special rules on compulsory licenses and on patent termination due to lack of exploitation of the patented invention. Compulsory licenses may be granted in case of non-exploitation, competition law violations or sanitary emergencies, among other cases. Patent termination may result when, after a compulsory license was granted for lack of exploitation, no exploitation of the invention takes place for two years after the license was granted.

    Ownership / licenses

    Joint ownership is permissible. The Patent Law includes provisions on the exercise of patent rights by the joint owners. In addition the Civil and Commercial Code rules on joint property apply to patents.

    The Patent law includes rules on licenses. Licenses are not exclusive, unless the parties provide otherwise. Competition law rules are applicable to restrictive clauses included in license agreements.

    Remedies for infringement

    The Patent law provides both civil and criminal law remedies for cases of infringement.

    Civil remedies include the compensation of damages and termination of the infringing activities.

    A complex system of rules for preliminary remedies in patent cases is included in the Patent law. Generally, suspension of an alleged infringer's exploitation requires a preliminary procedure, with the participation of expert witnesses.

    Criminal procedures and sanctions are rare.

  • Trademarks

    Nature of right

    A trademark may consist of one or more words, with or without conceptual content, drawings, commercial symbols, monograms, engravings, prints, seals, images, stripes, color combinations, letter and number combinations, the special graphics of letters and numbers, advertisement phrases, reliefs, and any other sign with distinctive capacity.

    A trademark is normally protected by means of its registration. However, de facto trademarks, that is those that are used but not registered, are also protected in a more limited way.

    Legal framework

    Trademarks are governed by the Trademark Law – Law 22,362, as amended.

    In addition, trademarks are protected by the rules included in Trips Agreement and in the Paris Convention.

    Duration of right

    Registered trademarks are protected for a period of ten years, from the moment of registration. Trademark registration may be renewed indefinitely.

    Registration may be cancelled for lack of use during a period of five years. In addition, renewal of registration requires proof of the trademark's prior use.

    Ownership / licenses

    Ownership is acquired by means of registration. However, use of unregistered trademarks may result in certain rights for the user.

    Trademarks may be subject to joint ownership. The Trademark Law and the Civil and Commercial Code provide the rules applicable to these joint ownership relationships.

    Trademark licenses are possible. They are valid even if they are not registered with the trademark office.

    Remedies for infringement

    The Trademark Law provides both civil and criminal law remedies for cases of infringement.

    Civil remedies include the compensation of damages and the termination of the infringing activities.

    Special preliminary remedies are applicable in cases of trademark infringement. The trademark owner may obtain an injunction against the infringer, when the trademark is registered and its violation is immediately evident.

    Criminal law remedies are rarely used in practice.

  • Trade secrets

    Nature of right

    Argentine law provides protection for trade secrets and confidential information. A complex set of rules creates rights against conduct whereby access is gained illegally to confidential information, or which implies illegal use of trade secrets or confidential information or which results in the unauthorized and harmful disclosure of confidential or secret information.

    Confidential information is characterized by the fact that it is kept in a reserved manner and that it is not generally available for technicians working in the relevant technical field. Trade secrets receive a special degree of protection, particularly under criminal law.

    Legal framework

    Confidential information is governed and protected by Law 24,766. It is also protected by the Trips Agreement and by the Paris Convention.

    In addition, multiple rules and statutes protect confidential information and trade secrets. Labor law protects the confidentiality and ownership of information used in employment relationships.

    Several criminal law rules apply to special types of violations of confidentiality. In particular, disclosure of trade secrets and unfair competition by means of the illegal use or appropriation of trade secrets are subject to criminal law penalties.

    Duration of right

    Confidential information and trade secrets is protected for as long as the relevant information is kept confidential. The degree of protection diminishes if the information ceases to be objectively a secret, due to its previous disclosure or because it has been obtained independently by other parties.

    Ownership / licenses

    Ownership results from the obtention of the information, accompanied by legal or practical measures aimed at restricting access to that information by third parties. No registration requirement is applicable.

    Joint ownership is possible.

    Trade secret or know-how licenses are common and enforceable.

    Remedies for infringement

    Argentine law provides civil and criminal law remedies for cases of trade secret infringement.

    Damages caused by these violations must be compensated. It is also possible to obtain court orders requiring termination of the violation.

    Preliminary remedies include injunctions against further exploitation or disclosure of trade secrets.

    Criminal remedies are applicable in cases of disclosure of trade secrets acquired in the course of employment and other professional relationship, as well as in cases in which the violation of the rights to confidential information or trade secrets results in unfair competition.

  • Other key IP rights

    Nature of right

    Industrial designs

    Industrial models and designs are protected by special industrial property rights. An industrial model or design consists in the forms embodied in or the aspect applied to an industrial or artisan product, which confer an ornamental character to such product.

    Exclusive rights on industrial models and designs result from registration of the relevant model or design.

    Industrial designs

    Industrial designs

    Legal framework

    Industrial designs

    Industrial models and designs are protected by Decree 6673/1963, as amended. They are also protected in accordance with the Trips Agreement and the Paris Convention.

    Duration of right

    Industrial designs

    The rights derived from the registration of an industrial model or design last for a five-year period, counted from the date of filing of the relevant application. The registration may be renewed for two successive five-year period, if the owner requests such renewal.

    Ownership / licenses

    Industrial designs

    Ownership belongs to the author. There is a rebuttable presumption to the effect that the first applicant of an industrial model or design registration is the author of such industrial model or design. Joint ownership is possible, and is governed by the Civil and Commercial Code and by Decree 6673/1963 as amended.

    Industrial models or designs may be the subject matter of license agreements. No registration is necessary for the validity of these agreements.

    Remedies for infringement

    Industrial designs

    Civil and criminal law remedies are applicable in case of infringement. Civil remedies include the compensation of damages and termination of the violation.

    Preliminary injunctions and remedies are possible in accordance with general procedural rules.

    Criminal sanctions have been recently reinforced, but they are rarely applied.

  • Intellectual property in employment context

    Employees

    Special rules on employee inventions are included in the Patent Law and in the Labor Contract Law.

    There are basically three types of invention, from the perspective of employer-employee relationships. First, inventions made in technological areas for which the employee was hired as a researcher or developer belong to the employer. The employee may be entitled to a special compensation if he or she develops a patented invention which exceeds the normal scope of the employee's work. Second, inventions related to the employee's work or related to the employer's know-how or activities belong to the employee, but allow the employer to exercise an option to acquire rights over the invention. If the option is exercised, the employee is entitled to a payment reflecting the value of the invention. Third, inventions that do not fall into the two previous categories belong to the employee.

    Similar rules are applicable in the case of other types of technology or intellectual property rights. In the case of software, the law applies the “work for hire” doctrine, but allows the parties to agree to different contractual rules.

    Consultants / contractors

    The law is not explicit about the rights of consultants and contractors, who do not qualify as employees, with regard to technology and other intellectual property they develop. Generally, the parties may agree as to the rules which will apply to such rights. In the absence of a contractual framework, the technology or intellectual property generated by a consultant or contractor who was hired with the purpose of developing such items that will belong to the person paying for such work.

  • Key commercial contract considerations

    Registration of commercial agreements

    The general rule is that commercial agreements are not registered, and that their validity and effect is not subject to registration requirements. However, certain types of agreement must be registered to be effective or to have full effects against third parties. Agreements subject to registration include business association agreements, certain publishing agreements, certain chattel mortgages and certain agreements related to real estate. International transfer of technology agreements are subject to registration for tax purposes.

    Recognized language of commercial agreements

    Agreements are generally entered in Spanish. However, it is legally possible to enter agreements written in other languages. These agreements must be translated when presented in court. Spanish language may be necessary in consumer transactions.

    Country-specific issues for online content

    Argentina has ratified the WIPO conventions applicable online content and practices. However, enforcement of these conventions is weak.

    Enforceability of online/clickwrap/shrinkwrap terms

    The general rule is that acceptance of terms included in online, click wrap or shrink wrap elements is valid and effective, provided such acceptance is clearly stated and applies to terms that were known to the person giving the acceptance. However, several rules may limit the effects of agreements entered by these mechanisms, particularly consumer protection rules and rules on adhesion contracts.

    Governing law

    The basic rule is that the parties may agree as to the law that will govern their contractual rights and as to the applicable jurisdiction in case of dispute. This freedom of election is subject to several limitations. Non-Argentine law will not be enforced in Argentine courts if it  is contrary to Argentine public policy. Also, certain matters are necessarily governed by Argentine law. For example, if a business association is created in Argentina, its organization and other corporate aspects will be governed by Argentine law. Decisions made by non-Argentine courts or arbitration tribunals are enforceable in Argentina only after going through a special procedure before the Argentine courts, in the context of which the decision will only be enforced if it complies with certain rules, particularly not violating Argentine public policy. In addition, certain matters – ie, deciding the validity of a patent issued in Argentina – are necessarily subject to Argentine jurisdiction.

  • Key commercial contract terms

    Enforceability of warranty disclaimers

    Argentine law provides certain warranties, generally applicable to all types of contracts implying the transfer of rights. These warranties apply, in particular, to the validity of the rights being transferred and to the fitness of the goods regarding which rights are transferred.

    The general rule is that these warranties may be limited or eliminated by agreement between the parties. However, these disclaimers are totally or partially invalid in several types of cases: if the transferor had prior knowledge of the invalidity of the transferred rights or of the deficiency of the goods involved; if the transferor is a merchant and the parties waiving his or her rights are not; and if the warranty disclaimer is included in a consumer or adhesion contract.

    Enforceability of exclusions/limitations of liability indemnification

    Exclusions or limitations of liability indemnification are valid if they meet the general conditions applicable to contractual. However, they may be unenforceable in the following cases: when they extend to willful violations or defaults, or to violations or defaults resulting from gross negligence; when they are imposed in adhesion or consumer contracts; or when they result in the violation or annulment of rights that may not be removed or limited contractually.

    Indemnification

    The basic rule under Argentine law if full indemnification of economic or moral damages caused by illegal conduct, whether that conduct constitutes a contractual or a tort violation.

    The parties are free to include contractual rules as to the extent of their indemnification obligations.

    Penalty clauses and liquidated damages clauses are acceptable, but they may be limited or amended by the courts if their terms are deemed abusive.

    In the absence of contractual provisions, the indemnification's extent will depend on circumstances such as the willful or negligent nature of the violation, foreseeability of the damages caused and the comparative fault of the parties.

    Electronic signatures

    Electronic signatures are valid and effective under Argentine law. However, certain legal effects require that the signature comply with a special certification regime.

  • Key contacts
    Guillermo Cabanellas
    Guillermo Cabanellas
    Senior Partner DLA Piper (Argentina) [email protected] T +5411 41145500 View bio

Key commercial contract terms

Enforceability of exclusions/limitations of liability indemnification

Argentina

Exclusions or limitations of liability indemnification are valid if they meet the general conditions applicable to contractual. However, they may be unenforceable in the following cases: when they extend to willful violations or defaults, or to violations or defaults resulting from gross negligence; when they are imposed in adhesion or consumer contracts; or when they result in the violation or annulment of rights that may not be removed or limited contractually.

Australia

Clauses that seek to exclude certain warranties or consumer guarantees or exclude or excessively limit liability will be construed strictly against the person that seeks to rely on the clause.

Clauses in standard form consumer contracts or standard form small business contracts that seek to limit or exclude liability are at risk of being considered unfair, and therefore void, under the unfair contract terms regime in the ACL.

Consumer contracts cannot exclude or limit certain consumer guarantees provided under the ACL or limit or exclude liability for breach of them. Any clause that seeks to do this will be unenforceable and such conduct could be considered to be misleading or deceptive and lead to legal action being taken against a person who included such clause in a contract or statement to a consumer.

Austria

Exclusion or limitation of liability is permissible in principle for damages caused by slight negligence; they are not permissible for willful misconduct. Limitations or exclusion of liability for gross negligence are not permissible in business-to-consumer contracts and exclusion for slight negligence is only possible to a certain extent and are explicitly excluded in certain cases.

Furthermore, any limitation of liability should be assessed as to whether or not it is contra bonos mores in the specific case.

Exclusion or limitation of liability for death and injury is not permissible.

The same principles apply for caps on direct damages, ie, a cap is considered as a limitation of liability and to be treated under the same principles.

Exclusion or limitation of liability for indirect or consequential damages is to a certain extent permissible, but these terms are not fully defined under Austrian law and a precise description of excluded damages is recommended.

Belgium

Limitations of product liability for defects are severely restricted under Belgian law. Aside from product liability, liability in general may be excluded in principle, subject to certain conditions. For instance, liability may not be excluded if such would lead to a complete elimination of the main obligations of the agreement, or would lead to limiting one's liability for fraud, willful misconduct, death or personal injury.

Brazil

The validity of the limitation/exclusion of liability clauses, as well as the establishing of a cap, are controversial in Brazil. The prevailing view is that such clauses are valid and enforceable, provided that they do not involve matters of public order or consumers' rights (especially in adhesion agreements), but that they would not apply in cases where the party has acted with willful misconduct or gross fault. The clauses may also be challenged in court, for instance, when the value of the indemnification agreed is not commensurate with the actual damage suffered or when the liability was an important element arising out of the nature of the transaction.

Nevertheless, even with the risk of being challenged, it is normal (and many times recommendable) to include limitations (eg, caps) and exclude certain liabilities, especially indirect damages (including loss of profit).

Canada

Exclusion or limitation of liability clauses are enforced based on contract principles applicable in the province in question. Courts as a rule will enforce such clauses in contracts that parties have negotiated, although they are frequently strictly construed. However, standard principles such as inequality of bargaining power (particularly in the case of consumer transactions), ambiguity or manifest unfairness of the clause may make such a clause unenforceable in a particular case. In some provinces consumer protection legislation limit the ability to effectively limit liability.

Chile

Exclusions and limitations on liability are usually enforced. Exclusions of liability for willful misconduct or gross negligence are not enforceable.

Enforceability of exclusions and limitations of liability against consumers are not allowed.

China

Limitation of liability is common in contracts. However, pursuant to the PRC Contract Law, if the gap between the actual loss and such limitation is too big, the court or arbitration institution is entitled to adjust the amount of compensation in its judgment or award.

Colombia

Parties shall establish the extent and scope of rights granted and limitations of liability. Even though such limitations are usually recognized, limitations and exclusions of liability for gross negligence, fraud or bad faith and not enforceable.

Czech Republic

The liability can be excluded or limited, with consent of both parties. This does not apply in respect of liability for damages caused willfully or in gross negligence, liability for interference in natural rights of a human individual (life, health, general personality right) or liability incurred by a weaker party, such as a consumer  none of these can be limited or waived in advance.

Denmark

Exclusions and limitations on liability may be enforced, provided there are fair, clear and obvious. In addition, they should often be well-reasoned. In case of gross negligence, exclusions and limitations are usually not accepted.

In agreements with consumers, limitations and exclusions are in most cases contrary to mandatory provisions. 

Finland

In B2B relationships, exclusions and limitations of liability are common and enforceable. However, exclusions and limitations of liability do not apply if the breach or damage results from gross negligence or willful misconduct. Highly biased and unconscionable exclusions and limitations of liability provisions can be either amended into a more reasonable form or nullified under Section 36 of the Contracts Act. This section is, however, very rarely applied to B2B contracts.

In the B2C context, several limitations apply to enforceability of exclusions and limitations of liability due to consumer protection legislation.

France

Exclusions or limitations of liability between businesses for breach of contract are both enforceable and common. Liability for gross negligence or willful misconduct cannot however be excluded. It is not uncommon to contractually cap one's liability, for example, to the total aggregate amount paid during a certain period in application of a given contract.

French law only makes a distinction between direct and indirect losses. Direct losses are those that are direct, foreseeable and caused by the act or breach concerned. Indirect losses are those that are not foreseeable but are linked to the act that has generated the loss (such as loss of data, revenue and goodwill). On occasion, courts will consider that lost revenues were foreseeable and therefore constitute direct losses.

Tort liability cannot be limited or excluded under French law.

Exclusions or limitations of liability towards consumers are generally unenforceable under French law.

Germany

As a general rule, limitations on liability can be enforced to a broad extent if individually negotiated (unless damages are due to willful intent). The ability to validly limit liability in general terms in conditions is, however, very restricted (B2C and B2B).

Damage claims under (unrestricted) statutory law generally include indirect and even unforeseeable damages. Thus, it is – at least in individually negotiated contracts – quite usual to agree on a liability cap caused by slight and gross negligence. Claims directly based on the specific Product Liability Act (Produkthaftungsgesetz) cannot be excluded or restricted.

Hong Kong

It is customary for sellers to exclude indirect damages (including consequential, incidental and special damages), but the exclusions/ limitations of liability for death or personal injury resulting from negligence are not enforceable in either business or consumer contracts.

A cap on direct damages or aggregate liability is also common.

The enforceability of exclusions and limitations on liability is subject to the test of reasonableness. The court will enforce such clauses if it is fair and reasonable in the circumstances. The relevant considerations include: the strength of the bargaining positions of the parties, whether the buyer received an inducement to agree to the term, or if it had an opportunity of entering into a similar contract without such similar term with others, whether the buyer knew or ought to have known of the existence and extent of the term, and whether it was reasonable at the time of contract to expect that compliance with the condition would be practicable.

Exclusions and limitations of liability for breach of the implied terms and conditions under the Sale of Goods Ordinance are not enforceable against consumers.

Hungary

Any contractual term limiting or excluding liability for deliberate non-performance of an obligation resulting in loss of life, or harm to physical integrity or health shall be null and void, so such terms are not enforceable.

India

The law relating to damages in contracts is contained under Sections 73, 74 and 75 of the Contract Act. Theory of damages in India rests on the concept of "restitution," that is, the sum of money awarded as compensation should be such as to put the injured party in the same position as he would have been, if he had not sustained the loss or damage for which he is getting damages.

Section 73 of the Contract Act prescribes that damages for breach of contract should either be such:

  • As may fairly and reasonably be considered as arising naturally, according to the usual course of things, from such breach itself
  • As may reasonably be/supposed to have been in the contemplation of the parties at the time they made the contract, as the probable result of the breach

Therefore, damages are not awarded for remote, indirect and consequential losses.

The concept of liquidated damages also finds its way into the Contract Act. It permits parties to determine, in advance, the amount of compensation to be paid on account of loss or damage caused by breach of contract. However, in this case as well, the discretion would lie with the court to determine the reasonable compensation that may be awarded for the breach, and if the amount mentioned in the contract is either unconscionable or disproportionate to the value of the performance promised, or consideration paid, the sum fixed would be deemed to be a penalty, which is not enforceable under Indian law. Also, the sum prescribed under contract, acts as a cap on the amount of damages that may be awarded, such that even where the reasonable damages is in fact greater than the sum prescribed under the contract, the court would only limit the damages to the amount mentioned in the contract.

Indonesia

Express exclusion/limitation of liability is recognized and generally respected.

Ireland

Generally, liability can be subject to limitation (in the form of a financial cap) and exclusions (of certain heads of loss) in both consumer (subject to the fair and reasonableness requirements referred to above) and in business contracts. Exclusions of liability for fraud or death and personal injury caused by negligence and for certain implied warranties will not be enforceable in a consumer contract. Current Irish case law indicates that it may not be possible to exclude liability for a fundamental breach.

Israel

Under Israeli law, parties are free to enter into an agreement which sets out exclusion or limitation of liability of one party (such exemption from liability will only bind the parties which agreed to it), except with respect to bodily injury or death which cannot be contractually stipulated or if such exclusion/limitation of liability is of a supplier in a standard contract (and thus such exclusion/limitation might be regarded as an unfairly prejudicial term contained within a standard contract) or in exceptional cases where the court might intervene and cancel such a provision if it contravenes public policy or if it is considered to be morally or socially undesirable. It should be noted that in practice, parties usually limit liability to direct damages only or restrict the maximum amount of liability.

Italy

Provisions containing limitations of liability are generally enforceable, except in the event of willful misconduct and gross negligence.

In case of standard contracts drafted only by one party, limitation of liability clauses shall be approved in writing by the other party, as mentioned above.

In B2C agreements, clauses excluding or limiting the liability of the vendor in the event of death or injury to the consumer due to an action or omission of the vendor are in any case void.

Tort liability may not be excluded or limited.

Japan

Exclusions and limitations of liability are usually enforceable unless they are grossly unfair. In consumer contracts, full exclusions or partial exclusions in case of gross negligence or willful misconduct are unenforceable under the CCA.

Luxembourg

Limitations of product liability for defects are severely restricted under Luxembourg law. Aside from product liability, liability in general may be excluded in principle, subject to certain conditions. For instance, liability may not be excluded if such would lead to a complete elimination of the main obligations of the agreement, or would lead to limiting one's liability for fraud, willful misconduct, death or personal injury.

Mexico

Provided that granting a warranty is not mandatory, if the seller or service provider grants warranty to its client, it shall respect such warranty in all its terms and conditions and contain the minimum requirements set forth by the applicable law

Netherlands

In principle, a party will be liable for all damages related to an attributable breach of the contract. With some exceptions, commercial entities are largely free to agree on a limitation of liability. Limitations and exclusions, for example with respect to consequential damages, are common to Dutch law contracts. Liability clauses do not apply to the extent, in the given circumstances, this would be unreasonably unacceptable according to standards of reasonableness and fairness. Limitations of liability set out in general terms and conditions are generally deemed unreasonable in B2C relationships. In B2B relationships within the supply chain, risk for product liability can, in general, be apportioned between the parties on an agreed basis by indemnity protection.

New Zealand

An exclusion or limitation of liability clause will generally be construed strictly against the party that drafted the clause or against the party seeking to rely on the clause where there is ambiguity, particularly where there is an imbalance of bargaining power. Clear and unambiguous language is generally required to exclude liability for negligence.

Where such a clause seeks to limit or exclude liability in relation to certain guarantees or representations in consumer contracts, these will be unenforceable.

In New Zealand, no action may be brought for personal injury covered by the Accident Compensation Act 2001 other than proceedings for exemplary damages. However, this liability may not be excluded or limited.

Norway

Exclusions and limitations on liability are usually enforced unless they are unconscionable, unclear or not conspicuous. Exclusions of liability in cases of gross negligence or willful misconduct, and for contractual terms which inappropriately excludes or limits the legal rights in the event of total or partial non-performance are presumed to be unfair, however there is little case law established on this point.

Poland

The parties to a contract who are professionals conducting business entity may limit the liability for negligence in full. However, it is not permitted to exclude liability for willful conduct.

There are specific laws which prohibit the exclusion or limitation of liability, the most well-known of which is the liability for hazardous products.

For contracts concluded with consumers, clauses excluding or limiting liability towards the consumer in the event of an injury to a person or the non-performance or improper performance of an obligation are considered abusive.

Portugal

As general rule, the enforceability of exclusions or limitation of liability is limited under Portuguese law. According to civil law, limitation of liability or exclusion of liability concerns the grounds of liability itself and the damages and losses. The law is not absolutely clear when dealing with the matter; therefore, some hold the opinion that the law does not prevent clauses limiting or excluding liability for acts of mere negligence, while others suggest that all clauses of exclusion or limitation are completely null and void.

Romania

Sellers, in their contracts for the sale of goods under Article 1709 (2) of the NCC, may limit their liability for hidden defects. A cap on direct damages or aggregate liability is also possible.

Russia

The liability may be limited (but not entirely excluded) by the parties only in the B2B context, but even in that case, liability for willful actions cannot be limited or excluded.

Saudi Arabia

Exclusions/limitations of liability are rarely enforced in the KSA courts even if the parties to a commercial contract agree to such limitation. 

Singapore

Exclusions and limitations of liability are common and generally enforceable in Singapore.

However, this is subject to the Unfair Contract Terms Act (Cap. 396). For example, under Section 2(1) of the Unfair Contract Terms Act (Cap. 396), a person cannot exclude or restrict their liability for death of personal injury from negligence while Section 3(2)(a) of the Singapore Unfair Contract Terms provides that in a contract where one party is a consumer or is subject to the other party's written standard terms of business, the other party cannot exclude or restrict his liability if the other party is in breach of the contract or relies on any term to render a different kind of service from that which was reasonably expect of him (or not render any service at all), except if such an exclusion or restriction satisfies the requirement of reasonableness.

Slovak Republic

Not applicable for this jurisdiction.

South Korea

Under Korean law, damage claims are made for compensation of:

  • Ordinary damages
  • Extraordinary damages

Ordinary damages are those that would normally be expected to result from a breach of contract or a particular tort. Extraordinary damages refer to all other damages than ordinary damages that arise from the special circumstances which the wrongdoer "knew" or "could have reasonably foreseen." Parties may validly agree to exclude indirect damages from compensation, limit indemnification for indirect damages, or exclude warranty liability. However, enforceability of such agreement may be restricted by:

  • Public policy and general principles of equity under the KCC
  • The court invalidating a clause that exempts a breaching party from liability for intentional wrongdoing or gross negligence on the part of that party

However, in practice, many companies provide for a damage cap despite the risk that such damage cap provision may be held unenforceable.

Spain

A cap on direct damages or aggregate liability is common.

Exclusions and limitation on liability are usually enforced unless they are unconscionable, unclear or not conspicuous. Exclusions of liability for fraud, personal injury, death, bad faith, gross negligence or willful behavior are not enforceable under Spanish law.

Exclusions and limitations of liability against consumers are generally not allowed.

Sweden

Sellers in their contracts for the sale of goods customarily exclude indirect damages.

A cap on direct damages or aggregate liability is also common.

Exclusions and limitations on liability are usually enforced unless they are unconscionable, unclear or not conspicuous. Exclusions of liability for personal injury, death, intent and gross negligence are not enforceable.

In consumer situations, a term which disclaims the seller's liability in cases of personal injury or death is presumed to be unfair. The same applies to a contractual term which disclaims all liability in cases of gross negligence and for contractual terms which inappropriately excludes or limits the legal rights in the event of total or partial non-performance or inadequate performance by the seller or supplier of any of the contractual obligations.

Switzerland

Under Swiss mandatory law, it is not possible to validly exclude or limit the liability of a party for gross negligence or intentional breach of contract. In particular, the limitation of a party's liability to a certain cap and the exclusion of certain categories of damages (such as indirect or consequential losses and loss of profits) would not be valid in the event of gross negligence or intentional breach of contract. As a result, liability may only be validly excluded or limited for damages caused by a party with slight or medium negligence.

Liability for auxiliary persons, such as employees, may be waived entirely.

Taiwan

Exclusions/limitations of liability are enforceable in Taiwan – provided, however, that responsibilities/liabilities for willful misconduct or gross negligence shall not be released in advance and in certain situations; if the transaction is obviously unfair, an application may be filed to the court for adjustment of liability.

Ukraine

Ukrainian legislation generally provides a possibility for the parties to an agreement to limit the amount of damages (real damages or loss of profits) to be reimbursed under the agreement. However, in certain cases Ukrainian legislation directly prohibits contractual limitations of liability. In particular, parties cannot contractually limit the liability of the producer (seller or service provider) in case of death or injury caused to the consumer by the action or omission of such producer (seller or service provider) or liability for damages caused to consumers by the defective product. Contractual limitations of liability for deliberate breach of obligations is not allowed.

United Arab Emirates

Under UAE law, absolute exclusions of liability in contracts are null and void. Restrictions on the ability of one contracting party to recover losses arising from fault by the other contracting party are not generally enforceable in the UAE, unless this fault is the result of fraud or gross misconduct. Moreover, the UAE Courts would be reluctant to award damages for economic reasons, other than those which the claimant can prove were actually suffered as a direct result of the defendant's fault.

United Kingdom

With some notable and important exceptions, commercial entities are largely free to agree between themselves how to apportion this risk and to limit their respective liability to each other. These can take varied forms from the complete exclusion of liability for specific types of loss to requiring claims to be made within a specific time frame.

Parties cannot, however, exclude or limit liability for:

  • Certain implied warranties (for instance any clause which purports to supply goods without the right to do so)
  • Death or personal injury caused by their, or their employees, negligence
  • Fraud and fraudulent misrepresentation

Other common provisions seeking to exclude or limit liability (be they certain types of actions, such as negligence, or certain losses or claims, such as wasted management time) may need to pass the "reasonableness" test set out under UCTA in order to be valid and enforceable; this will however depend on a range of factors, including whether a supplier is contracting on its standard terms and the balance of bargaining power between the parties (in addition, please see the comments as to international supply contracts included in enforceability of warranty disclaimers).

English and Scottish contract provisions are construed Contra Proferentum (against the party that drafted them); therefore, care should be taken to ensure clarity and accurate drafting of liability clauses. Equally, where there is any ambiguity in an exclusion of liability clause this will be interpreted against the party seeking to limit/exclude its liability, so care should be taken when drafting to avoid ambiguous terms.

Liability will continue throughout the contract and may not cease after the contract has been fulfilled, terminated or expired, subject to statute and any warranties and indemnities set out in the contract.

It is common practice for the parties to agree on the total amount which can be claimed in the event that a contract is breached, and to expressly state this cap in the contract. As explained above, such a cap on liability may be subject to the reasonableness test depending on the circumstances.

United States

Sellers, in their contracts for the sale of goods under Article 2 of the UCC, customarily exclude indirect damages (including consequential, incidental and special damages).

A cap on direct damages or aggregate liability is also common.

Exclusions and limitations on liability are usually enforced unless they are unconscionable, unclear or not conspicuous. Exclusions of liability for fraud, personal injury, death and in some states bad faith, willful injury or unlawful conduct, are not enforceable. Some states allow exclusions of liability for gross negligence if "gross negligence" is specified in the contract.

Enforceability of exclusions and limitations of liability against consumers may differ from jurisdiction to jurisdiction.

Most jurisdictions preclude recovery of punitive (exemplary) damages for contract breaches without a separate and independent tort claim.

Contracts with Federal and state government agencies may have statutory limits on their liability.