Exclusion of Liability

Also known as: Limitation of Liability, Exclusion Clause, Liability Cap, Sorumsuzluk Anlaşması, TCO Article 115

In short

A contract clause that excludes in advance, or limits to a specific amount or type of loss, the debtor's liability for breach of contract.

In commercial contracts, parties seek to make risks predictable by limiting their liability, using liability caps, exclusions of indirect loss and exclusions for particular risks. The Turkish Code of Obligations places significant limits on this freedom.

Validity Limits (TCO Article 115)

Gross fault: An advance agreement excluding the debtor’s liability for gross fault is absolutely void.
Employment contracts: Any advance agreement excluding liability for obligations arising from an employment contract is absolutely void.
Licensed professions: Where a specialised service, profession or trade may only be carried on under licence, an exclusion of liability even for slight fault is absolutely void.

Auxiliary Persons (TCO Article 116)

The debtor is liable for the acts of auxiliary persons used in performing the obligation. This liability may be excluded wholly or partly in advance, subject again to limits for employment contracts and licensed professions.

Drafting

Liability cap: For example, the contract price or fees paid in the last 12 months
Exclusion of indirect loss: Lost profit, loss of reputation, loss of data
Carve-outs: Leaving intent and gross negligence, breach of confidentiality, IP infringement, personal data breaches and personal injury outside the cap

Stating these distinctions clearly helps the clause remain valid.

Standard Terms and Consumers

Clauses limiting liability in unilaterally drafted standard texts are subject to standard terms control. In consumer contracts they may be unfair contract terms.

Frequently Asked Questions

Is a clause stating "no liability whatsoever" valid?

Not entirely. An advance agreement excluding the debtor's liability for gross fault (intent or gross negligence) is absolutely void (TCO Article 115(1)). Liability for slight fault can generally be limited.

Can a software or consultancy firm limit liability for slight fault?

Generally yes. But where the service, profession or trade can only be carried on with a licence from the law or authorities (e.g. law, medicine, banking), an exclusion of liability for slight fault is also absolutely void (TCO Article 115(3)).

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