Limitations and exclusions of liability in business to business contracts in Ukraine

Contractual limitations or exclusions of liability in B2B relationships in Ukraine are based on the principle of freedom of contract: the parties may agree on the scope, types and limits of liability, provided that such provisions are expressly set out in the contract and reflect an agreed allocation of risks between professional counterparties.

At the same time, freedom of contract must not contradict mandatory rules of law or negate the very essence of the obligation. Only those limitations are permissible that preserve a balance of the parties’ interests and do not render liability merely formal.

In cross-border contracts, the parties also enjoy broad autonomy in defining liability terms, including the right to depart from default regulatory regimes, where this is expressly permitted by the chosen governing law or by the international rules applicable to the contract.

Yes, Ukrainian law sets mandatory limitations under which certain clauses limiting or excluding liability are void. Any exclusion or limitation of liability for a wilful breach of an obligation or other bad-faith conduct is not permitted, as such wording is null and void regardless of the parties’ intent.

Limitations must not contradict mandatory rules, in areas where the law directly prescribes the scope or nature of liability and does not allow it to be modified by contract between the parties.

Separately, in cases of non-contractual (tort) damage, the liability regime is determined by law and cannot be excluded by a contract between the parties. Accordingly, any contractual provisions that seek to circumvent such approaches will have no legal effect.

Parties to a B2B contract in Ukraine may exclude or limit liability for consequential, indirect or special losses.

In Ukraine, losses are recoverable only if a direct and foreseeable causal link between the breach and the losses incurred is proven. Where the losses are merely a remote or indirect result of business activity rather than an immediate consequence of the breach, liability does not arise regardless of what the contract states.

Nevertheless, to better protect the parties, B2B contracts often include specific provisions limiting liability for such losses.

Yes, in B2B contracts the parties may contractually exclude liability for loss of profit, revenue, data, goodwill/reputation or anticipated savings. 

Such losses are typically treated as lost profit or other indirect losses, and the parties may expressly provide in the contract that they are not recoverable or may be limited. 

However, lost profit must be real and duly proven and is recoverable only where all elements of liability are established and the creditor proves a real opportunity to obtain the relevant income. Accordingly, exclusion of liability for loss of profit, revenue, anticipated savings or goodwill is generally permissible but cannot be used to circumvent the mandatory prohibition on liability for wilful acts.

Yes, financial caps on liability are quite common in B2B practice, as they enable the parties to forecast risks and limit potential losses.

In practice, this is usually achieved by setting contractual fines or penalties, as well as overall liability “caps” or excluding certain types of losses. Penalties are convenient because they are recoverable irrespective of the actual amount of losses. At the same time, their amount may be reduced by a court if it is disproportionate to the consequences of the breach.

Yes, the parties may provide for an “exclusive remedy” and make a specific remedy the sole remedy.

However, such provisions do not prevent a party from going to court or using other remedies if the contractual mechanism does not ensure an effective restoration of the infringed right.

In addition, a contract cannot exclude remedies that directly follow from law. For example, if a transaction is declared invalid, the statutory consequences apply: mutual restitution of everything received (or reimbursement of its value), as well as compensation for damages by the party at fault.

Yes, Ukrainian courts may preserve the validity of the remaining contractual provisions where a liability limitation is partially invalid, provided the clause is severable and its removal does not affect the essence of the contract.

In assessing severability, courts consider whether the clause was a key element of risk allocation, the parties’ original intent and the economic balance of the contract; similar reasoning applies in assessing material breach.

Where deletion of the clause would materially alter the economic model or the agreed allocation of risks between the parties, severance will not be permitted. Ambiguous clauses are interpreted against the party that drafted them. In any event, courts will refuse to uphold even part of a liability limitation if it breaches mandatory law, deprives a party of effective judicial protection, or enables an abuse of rights.

The parties may extend statutory limitation periods, but they cannot shorten them.

Limitation periods in Ukrainian civil law are statutory. The general limitation period is three years. Such period starts once the claimant knows, or should reasonably know, that their right has been infringed or who is responsible for that infringement.

The autonomy of the parties is limited: limitation periods may only be extended by written contract. Contractual shortening is unenforceable as contrary to mandatory law and the right to judicial protection.

Yes, contractual liability exclusions in B2B contracts are generally permissible but may be overridden by public policy considerations derived from mandatory law and general principles. Freedom of contract is limited by good faith, reasonableness and fairness. Courts may refuse to apply exclusions that deprive a party of effective judicial protection or undermine contractual balance.

Courts do not uphold exclusions covering wilful misconduct or abuse of rights, as contracts cannot legalise harm or circumvention of law. Courts also apply doctrines prohibiting inconsistent or contradictory behaviour and reject fraudulent or evasive arrangements where liability exclusions would harm third-party interests or facilitate avoidance of mandatory rules.

Ukrainian law adopts the view that the cross border nature of a contract does not in itself lead to a different treatment of liability limitation clauses. The decisive factors are the applicable law, mandatory rules and public policy.

Where Ukrainian law applies, liability clauses are assessed under Ukrainian substantive law irrespective of the place of performance, unless displaced by mandatory international conventions.

Foreign law applies in principle. However, Ukrainian courts may refuse to apply foreign law or contractual clauses where they violate Ukrainian public policy or disregard mandatory Ukrainian rules applicable regardless of the chosen law. Performance in Ukraine may also trigger mandatory safety, environmental or third-party protection rules overriding contractual liability exclusions.