Exclusions of liability for indirect or consequential loss – the road to hell is paved with good intentions

Abstract

How should an exclusion of liability for indirect or consequential loss be inter- preted in a Swedish-law contract? Swedish lawyers generally refer to section 67 of the Sale of Goods Act, but there are several problems with that section, not least that it is worded to apply in the specific context of the sale of goods. The Government Bill, Prop. 1988/89:76, makes clear that the legislator had some basic principles in mind when considering the general distinction between direct and indirect loss. It is suggested that these basic principles are largely similar to those found in the common law, with reference to the classic English cases of Hadley v. Baxendale and Victoria Laundry. Applying these basic prin- ciples, it is further suggested that loss of profit could, in certain cases, be classi- fied as a direct loss. It is also suggested that the term “consequential loss” is best avoided. Some advice is given to contract drafters at the end of the article.