International Construction Law Review
INDIRECT AND CONSEQUENTIAL LOSS CLAUSES UNDER SWISS LAW
THOMAS SIEGENTHALER
Dr. iur. (Fribourg), M Jur (Oxon), Attorney-at-Law Schümacher Baur Hurlimann, Zurich
AND
JOSEPH GRIFFITHS1
BA (Hons) (Dunelm), Solicitor, Kendall Freeman, London
1. INTRODUCTION
As commercial transactions grow ever more international, more and more contracts under Swiss law are being written in English. The lawyer responsible for drafting such a contract has to face the difficulty of expressing concepts of Swiss law using terms which originate from common law notions. Increasingly, model contracts drafted within a common law context are being imported to serve where Swiss law applies. This saves time, and fulfils many clients’ expectation of finding more or less the same clauses in any international contract. But “standard” contract language may be interpreted differently when read against a Swiss, rather than an English, legal background.2
This dilemma is illustrated by the example of the following exclusion clause: “Neither party shall be liable to the other for any indirect or consequential losses whatsoever.” Clauses of this type appear frequently in contracts for the sale or construction of industrial machines, and are usually intended to express the seller’s unwillingness to participate in the economic risk of the buyer’s production process. As the causes of malfunctions are often technically difficult to establish and, as any one cause is often only contributory, liability for a buyer’s lost production presents a hazard to a seller. Moreover, a defect may require a kind of double compensation, that is, not only a reduction of the price (“Minderung
”), but also compensation for the machine (with the reduced price) not performing to the capacity of a machine with the full price.
This article attempts to elucidate the possible meaning of such an “indirect and consequential loss” clause under Swiss law. After a summary of the principles applicable to the interpretation of contracts under Swiss law
1 We wish to thank Marco Scruzzi and Frances Miller for their helpful comments.
2 E.g., clauses referring to the doctrine of misrepresentation.
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