Why this matters for micro and small enterprises

For many MSEs, a dispute feels like the beginning of the end. A letter from a lawyer arrives, stress builds, and what began as a misunderstanding morphs into a costly war. Yet a few well-placed clauses in your General Terms and Conditions (GTCs) can shift the terrain. They turn courtroom drama into structured dialogue, giving you predictability and protection.

Take X BV, a Dutch company with international clients, including some in the US. Their GTCs lacked a mediation clause, pointed jurisdiction to a court in Noord-Brabant, and had no limitation of liability. The consequences? Constant exposure to high legal costs, uncertainty about proceedings, and the risk of claims far exceeding contract value.

Three clauses could have made the difference: mediation, jurisdiction, and limitation of liability. Together they form not only a shield but a de-escalation strategy.

Mediation clauses: defusing conflict early

A mediation clause requires both parties to attempt a facilitated discussion before starting proceedings. For founders, this buys time and reframes disputes as conversations, not battles.

What it does: it creates a cooling-off stage, lowers legal costs, and preserves relationships.

What it doesn’t do: it doesn’t block court action if mediation fails. Mediation is a step, not a trap.

Most cases settle faster under mediation. It also signals professionalism: partners see you as solution-oriented, not combative.

Jurisdiction clauses: certainty over “where”

Without a jurisdiction clause, you may end up dragged before a foreign court. In one case, a Dutch company with US clients faced unpredictable litigation abroad simply because its GTCs were silent.

What it does: it designates the court that will hear disputes, for example, “The competent court of Amsterdam.”

Why it matters: it delivers predictability, reduces uncertainty, and strengthens your bargaining position.

Picking your home court avoids surprise travel and foreign lawyers. It also deters frivolous threats: a counterpart may think twice about litigation when they know the trial will happen on your turf.

Limitation of liability clauses: setting boundaries

A limitation of liability clause sets the maximum exposure if something goes wrong. Without one, liability can be endless.

What it does: it caps damages at a reasonable level, often the contract value.

What it doesn’t do: it cannot excuse fraud, gross negligence, or consumer rights. Those limits are non-waivable.

These clauses usually align with insurance coverage, preventing promises beyond what you can pay. They also set expectations: you stand by your work, but within fair boundaries.

The practical impact for MSEs

For micro and small enterprises, these clauses mark the line between a manageable dispute and an existential threat.

Staying ahead

Disputes are inevitable. Chaos is not. By including these three clauses in your GTCs, you establish rules of engagement that protect time, resources, and focus. Courts respect foresight. Clients respect partners who play fair but firm.

Checklist for founders

• Add a mediation clause to ensure dialogue before escalation.
• Choose a clear jurisdiction, usually your local court.
• Draft a limitation of liability clause that is reasonable and enforceable.
• Check compliance with consumer law where relevant.
• Align the clauses with your insurance cover.