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(Im)possibility of contractual limitation of damages under Slovak law

Under Sec. 386 Commercial Code it is impossible to waive a claim for damages in advance, before violation of an obligation leading to damage.

The statutory ban on waiver of damages in advance, i.e. before violation of an actual obligation leading to damage, is a cogent provision from which the parties cannot deviate and which automatically applies to legal relationships. The same provision indicates that it is possible to validly waive damages after violation of an obligation, even if it is not yet clear if the violation led to actual damage.

It remains unclear if “waiver of damages” only means waiver of damages to the whole extent, or if the legislator also intended to ban partial waivers of damages. The question remains whether a partial waiver of damages in advance is legal and if it is possible to limit a claim for damages for the future.

Section 379 Commercial Code states the general rule that any damage is to be compensated (actual damage, lost profit, costs of the party suffering damage due to violation of an obligation). This provision is not binding on the parties. This could mean that the law gives the contracting parties the opportunity to modify the extent of damages within their contractual freedom through agreement. The parties could e.g. agree that in case of damage only the actual damage will be compensated, and not lost profit and related costs. In this regard it would also be possible within contractual freedom to limit the amount of compensation for actual damage. This opinion is supported by Section 545 (2) Civil Code on contractual penalties (which also applies to relationships under commercial law) which states that a creditor is not allowed to claim for damage caused through violation of an obligation which is covered under a contractual penalty, unless the agreement on contractual penalty states otherwise, and that a creditor can claim damages exceeding the extent of the contractual penalty only if this was arranged between the parties. This legal provision explicitly limits the extent of damages.

In this connection it is important to emphasize that the possibility to limit the extent of damages has its limits. An agreement about a “symbolic amount” of damages could be seen as violation of the statutory ban on waiver of damages.