Discuss a matter

Limitation of liability under Bulgarian law: what survives and what doesn't

In short

  • Any advance exclusion or cap on liability for intent or gross negligence is void under Bulgarian law. The standard carve-out is not a concession — it is the law.
  • "Indirect" and "consequential" loss are not Bulgarian legal categories. Exclude losses by type, not by label.
  • Lost profit is recoverable by default. If you want it excluded, say so expressly.
  • Penalties between merchants cannot be reduced for being excessive, but they can still be void as contrary to good morals.

1. First question: which law governs?

Under the Rome I Regulation (Art. 3), the parties to a commercial contract are free to choose the governing law. The analysis below applies where Bulgarian law governs — either by choice or by default. Even under a foreign governing law, overriding mandatory provisions (Art. 9) may still be relevant.

2. Gross negligence and intent cannot be capped

Article 94 of the Obligations and Contracts Act (ZZD) provides that a prior agreement excluding or limiting the debtor's liability for intent or gross negligence is null and void.

What this means for drafting

  • A cap "for all claims howsoever arising" is valid only for ordinary negligence. For gross negligence and intent, it simply does not apply.
  • The carve-out "except in case of gross negligence or wilful misconduct" is therefore legally required, not a negotiating point. Suppliers sometimes resist it; the resistance changes nothing.
  • "Wilful misconduct" is a common-law term. The Bulgarian equivalents are intent (умисъл) and gross negligence (груба небрежност). In a bilingual contract, use the Bulgarian terms in the Bulgarian version.

3. Foreseeable, direct loss — the default rule

Under Art. 82 ZZD, damages cover actual loss and lost profit that are a direct and immediate consequence of non-performance. Where the debtor did not act in bad faith, recovery is limited to damages that could have been foreseen at the time the contract was concluded.

Why this matters

  • Bulgarian law already excludes damages that are not a direct and immediate consequence. An exclusion of "indirect loss" may therefore add little — or, worse, be read as excluding something the parties did not intend.
  • Lost profit (пропусната полза) is recoverable if it is a direct consequence. An English-style clause that assumes lost profit is "consequential" will not have that effect automatically.

Better approach: list the excluded categories expressly — lost profit, loss of revenue, loss of data, loss of goodwill, cost of replacement services — and state whether each is excluded fully or only above a threshold.

4. Penalties (неустойка) and service credits

Under Art. 92 ZZD, a penalty secures performance and serves as compensation for damage without the need to prove it. The creditor may still claim damages exceeding the penalty.

Two rules pull in different directions:

  • Art. 309 of the Commerce Act: a penalty agreed between merchants cannot be reduced by the court for being excessive.
  • Interpretative Decision No. 1/2009 of the General Assembly of the Commercial Chambers of the Supreme Court of Cassation: a penalty can nevertheless be void as contrary to good morals, assessed at the time of contracting and with regard to its functions.

Service credits in SLAs are frequently penalties in substance. The contract should answer three questions:

  1. Are service credits the exclusive remedy for the service level failure, or can the customer also claim damages above them?
  2. Do service credits count towards the liability cap?
  3. Is there a separate cap for service credits (e.g., a percentage of monthly fees)?

If the contract is silent, Art. 92 ZZD allows the customer to claim additional damages — which is rarely what the supplier intended.

5. Personal data

Article 82 GDPR gives data subjects a right to compensation against controllers and processors. A cap between the parties does not limit liability towards data subjects. The parties can still allocate that exposure between themselves — typically by a separate, higher cap for data protection breaches.

6. Checklist

  • Governing law confirmed
  • Cap applies to ordinary negligence only; carve-out for intent and gross negligence
  • Excluded losses listed by category, not "indirect/consequential"
  • Lost profit expressly addressed
  • Penalties and service credits: exclusive remedy? inside the cap? separate cap?
  • Penalty size tested against good morals criteria
  • Separate treatment for data protection, confidentiality and IP infringement
  • Bulgarian version uses Bulgarian legal terms, not calques

Last reviewed: 2026-09-16. This article is general information and not legal advice.