From 1 January 2012, an amendment to Act No. 513/1991 Coll., the Commercial Code, as amended (hereinafter referred to as the “Commercial Code”), published under No. 351/2011 Coll. (hereinafter referred to as the “Amendment”), enters into force. The Amendment introduces several interesting innovations into the Commercial Code, and within the framework of this circular we shall address the new wording of the provision of Section 386(1) of the Commercial Code, which regulates the question of the admissibility of limitation of damages in commercial relationships. The Amendment has completely changed the provision of this paragraph, as its entire existing text has been replaced, but also in terms of meaning the sense of this provision is completely opposite.

The provision of Section 386(1) of the Commercial Code in the wording effective until 31 December 2011 provided that it is not possible to waive the right to compensation for damage before the breach of an obligation from which damage may arise. This provision was based on the principle which did not permit the waiver of rights that may arise only in the future. It was a mandatory provision of the Commercial Code which could not be excluded by agreement of the contractual parties. The interpretation of the content of this paragraph was not uniform, particularly as regards the question of the possibility of a certain contractual limitation of the scope of the right to compensation for damage, which would not constitute a waiver of the entire right to compensation for damage. Part of legal theory allowed for the possibility of validly concluding an agreement on limiting the scope of compensation for damage, which would be proportionate to the circumstances of the given case and the commercial relationship, and would not constitute an exclusion of compensation for damage or its retention only in a formal or unreasonably low amount. However, concluding such an agreement was a legal risk, particularly in view of the fact that there was no settled and uniform case law on this matter, with a fundamental decision of the Supreme Court on this matter being absent.

With effect from 1 January 2012, the content of the provision of Section 386(1) of the Commercial Code is completely opposite, as it expressly permits the parties to commercial legal relationships to waive completely the right to compensation for damage, even before the breach of an obligation from which the damage arose. This amendment has thus eliminated the interpretative problems of this provision before 1 January 2012, and greater legal certainty has been brought into legal relationships between entrepreneurs. However, when concluding agreements limiting the right to compensation for damage which is to arise in the future, it is also necessary to assess whether such an agreement of the parties to the commercial legal relationship is in accordance with the rules of fair commercial practice, as one of the principles upon which the Commercial Code stands. If such an agreement were contrary to the principles of fair commercial practice, it would not enjoy legal protection, which means that it would not be invalid, but the court would refuse to protect the exercise of such a right.

In conclusion, we remind that the possibility of limiting compensation for damage is permitted only in commercial-contractual legal relationships and not in consumer relationships (contracts between a trader and a consumer). On the other hand, the significance of this provision for supplier-customer relationships is considerable.

This text was originally prepared by the law firm Mašek, Kočí, Aujezdský in cooperation with the civic association Association for Electronic Commerce (APEK) as legal circular No. 12/2011 intended for members of this association.

This text was translated from Czech to English using an AI translator.