Limitation of liability in EULAs and SaaS terms: what stands up against businesses and against consumers

The same paragraph recurs in software licence terms and in the terms of SaaS services: the provider is not liable for lost profit, loss of data or indirect damage, and its total liability is capped at the amount the customer paid in the last year. In common-law jurisdictions such a clause is standard and enforceable. In Slovak and Czech law, its fate depends on whether the customer is a business or a consumer, and in which country the contract is assessed.

Business customers in Slovakia: no waiver of damages in advance

Between entrepreneurs, liability for damage is governed by the Commercial Code (Act No. 513/1991 Coll.). A party in breach of a duty must compensate the damage unless it proves circumstances excluding liability (Section 373). Both actual loss and lost profit are compensated, but not damage exceeding what the party in breach foresaw or could have foreseen when concluding the contract (Section 379). The boundary for contractual arrangements is set by a single provision:

A claim for damages may not be waived before the breach of duty from which the damage may arise.

— Section 386(1) of Act No. 513/1991 Coll. (unofficial English translation)

This rule belongs among the provisions from which the parties may not derogate (Section 263(1)). A complete exclusion of liability is therefore invalid against a business customer. With caps, the position is less clear-cut. Part of the Slovak literature accepts a proportionate cap, part regards it as a prohibited partial waiver of the claim, and it therefore cannot be assumed in advance that a court will accept a cap as proportionate. A token cap that effectively excludes compensation is all the more vulnerable, because it appears to circumvent the prohibition.

Safer are the tools the law itself offers. The provisions on circumstances excluding liability (Section 374) and on the extent of compensation (Section 379) are not on the list of mandatory provisions. The contract may therefore describe precisely what the service is for and what the provider knows about the customer at the time of contracting, and thereby influence which damage was foreseeable. The second tool is a contractual penalty: where it covers the breach, the creditor does not receive damages unless the parties expressly agree otherwise (Section 545(2) of the Civil Code). With an SLA it is therefore necessary to decide whether credits are a penalty or a price reduction, which is discussed in SLA credits and damages.

Business customers in Czechia: a cap is possible, with exceptions

The Czech Civil Code starts from the opposite premise. It permits limitation of damages, but disregards any arrangement excluding or limiting in advance compensation for harm caused to a person’s natural rights, harm caused intentionally or through gross negligence, and equally any arrangement excluding or limiting the right of a weaker party to compensation for any harm (Section 2898 of Act No. 89/2012 Sb.). An identically drafted clause may therefore stand up in a Czech contract and not in a Slovak one. For a product serving both markets, the governing law must be chosen deliberately and the cap adapted to it.

Consumers: there is almost no room for limitation

Against consumers, unfair terms include in particular provisions excluding or limiting the trader’s liability for death or personal injury and those excluding or limiting the consumer’s rights arising from liability for defects or for damage (Section 53(4)(c) and (d) of the Civil Code). Unfair terms are invalid (Section 53(5)). For applications and digital services sold to consumers, the special rules on contracts for digital performance also apply (Section 852a et seq.), setting out what characteristics digital performance must have.

A consumer EULA is therefore protected not by an exclusion of liability but by a precise description of the product. The law permits digital performance to fall short of a commonly expected characteristic where the trader expressly informed the consumer of this on conclusion of the contract and the consumer expressly and separately agreed to it (Section 852d(2)). Separate agreement requires a distinct act; a general sentence in lengthy terms does not meet it.

How to draft a provision that holds up

Separate the regime for business customers from the regime for consumers and do not use a single sentence for both groups. For businesses, describe the purpose of the service and what the provider is not liable for because it lies outside its control, for example outages of third-party networks or incorrect data entered by the customer. If you want a cap, tie it to the value of the contract and leave outside it damage caused intentionally and through gross negligence. With an SLA, decide deliberately on the relationship between credits and damages.

For consumers, pay attention to the description of functions, system requirements and product limitations, and to separate consents wherever the product deliberately departs from ordinary expectations. Remove from consumer terms any exclusions that would not survive a dispute, because in an inspection or a dispute they will harm you more than they help.

We prepare licence terms for installed software and applications through our licence terms (EULA) service, and terms, SLAs and a data processing agreement for a service operated in your infrastructure through SaaS contract and terms. What licence terms may not prohibit even to a business customer is explained in prohibiting back-up copies and decompilation in a EULA.

How this will work under the new Civil Code

On 1 October 2026, the National Council of the Slovak Republic approved the new Slovak Civil Code, which will take effect on 1 July 2027. It changes the starting point for liability limits in licence and SaaS terms. The Commercial Code is not being repealed, however, and only the implementing amendment will decide definitively whether its prohibition in Section 386 ceases to apply between businesses. The parties will be able to agree, even in advance, to limit or exclude liability for non-performance of the contract. An agreement limiting or excluding liability for intentional non-performance will be invalid. A cap tied to the contract value or an exclusion of lost profit would thus have a direct basis in the statute. Unlike the Czech text, the Slovak text does not expressly exempt gross negligence from the limits, but it remains sensible to leave it outside the cap. The restriction of compensation to foreseeable damage will not apply to intentional non-performance or to non-performance through gross negligence.

A check on surprising terms will be added. A provision of standard terms that the customer could not reasonably expect will not become part of the contract unless the customer expressly accepted it or was expressly alerted to it. A business customer must object to this within one year of concluding the contract. If the damage was caused intentionally, the customer will be entitled to compensation even beyond the agreed penalty.

For consumers, the substance does not change. Limiting liability for death or personal injury and limiting rights arising from liability for defects or for damage remain unfair terms. Digital performance will still require express and separate consent to a departure from commonly expected characteristics.

Contracts concluded by 30 June 2027 will be governed by the existing law even if the breach occurs later. Prepare the new limit, therefore, as a separate version of the terms for contracts from 1 July 2027 and mark it visibly in the text. For a broader overview, see our article on what the new Civil Code changes for damages.

Status as of 22 October 2026: the act has been approved and was signed by the President on 20 October 2026, but has not yet been promulgated in the Collection of Laws. Until 30 June 2027, the rules described above in this article apply.