Even if you have fully comprehensive T&Cs, that doesn’t protect you as a founder from every risk. In fact, there are some kinds of liability that, by law, simply cannot be excluded. Product liability, for example if a faulty product causes damage, is a case in point. This liability applies whether or not any blame exists, and it is not possible to exempt oneself from it with a warning in the T&Cs or operating instructions.
How Much Protection Can The T&Cs Offer Me?
Certain legal requirements need to be met for liability to be contractually excluded. Under Art. 100 of the Swiss Code of Obligations, for example, liability exclusions become null and void in the event of wilful or grossly negligent acts. The situation is different for liability for misconduct by agents – who in the normal course of business are often employees. This liability can be excluded even where intent or gross negligence exists.
However, even these kinds of liability exclusions will not be readily accepted in every instance. If diligent activity is typical of one contractual party, the exemption for slight or moderate negligence can be null and void. This is the case for many service agreements in particular. There is controversy over whether it is possible to exclude liability for bodily injury cases – which are of course the most unpleasant and expensive. As a result, the entrepreneurs in question are left facing great uncertainty as to whether they are sufficiently protected.
It is important to note that liability exclusion clauses in T&Cs are of no use at all if they aren’t even part of the contract. It is therefore critically important to ensure that the contract includes a reference to the T&Cs. In general, T&Cs are only created for a company’s standard dealings, not for further business relationships. If a claim is made in such a context, the liability exclusion in the T&Cs will not apply.
Summary
In short, the grounds for liability are often too complex to be fully excluded through your T&Cs. Even if you have clauses in your T&Cs that have been worded for individual cases, they will not protect entrepreneurs from every kind of liability. That’s why it’s always worth also protecting yourself with liability insurance, especially if you risk facing large claims.
However, it is important to note that when you take out an insurance policy, its protection is also limited to specific cases. You therefore need to be careful when it comes to selecting your insurance, just like when you’re writing your T&Cs. In principle, however, protecting yourself in two ways like this will substantially reduce the risk of ending up in financial trouble in the event of a claim.
