MALTA Law and Practice Contributed by: Andrew J Zammit, James Bartolo and Nicholas Scerri, GVZH Advocates
that have been encountered in relation to IT ser - vice agreements. An IT service agreement will be valid even if not done in writing, but verbal contracts of this nature are most certainly not recommended. Limitation of Liability It is quite common for limitation of liability clauses to be included in service contracts. In this respect, it should be noted that in certain circumstances liability cannot be limited. One example is that where fraud is involved. This would invalidate the entire contract, including any limitation of liability clauses. Furthermore, Maltese jurisprudence has also held in various situations that liability cannot be limited in cases of gross negligence. Maltese courts have on occasion also used rea - soning similar to the “doctrine of fundamental breach” to invalidate limitation of liability clauses where the party commits a breach of the con - tract that is so fundamental that it deprives the other party of essentially the whole of the con - tract’s benefits. The Maltese courts have also invalidated limitation clauses on occasion simply because they were not brought to the attention of the weaker party, even though the clause itself was technically valid, although this would prob - ably apply more readily in the case where the recipient of the IT service is a consumer. Where the IT service contract includes the provision of materials, one needs to consider that war - ranties against latent defects cannot always be excluded. Product liability issues may also need
the non-solicitation clause). Frequently, penalty clauses are pre-liquidated, so the sum due in the event of a certain violation would be specified in the contract itself. The Maltese courts would generally tend to uphold the penalty clause stip - ulated between the parties, unless the amount is grossly unfair to one of them. In this respect, it should be noted that the Civil Code provides that a court cannot abate or mitigate a penalty agreed between the parties except: • if the service provider has performed the obligation in part, and the recipient of the service has expressly accepted the part so performed; or • if the service provider has performed the obli - gation in part, and the part so performed is clearly useful to the recipient of the service. In any such case, an abatement cannot be made if the recipient of the service, in undertaking to pay the penalty, has expressly waived their right to any abatement or if the penalty has been stip - ulated in consideration of mere delay. Therefore, it is important to consider the inclusion or other - wise of such wording in the contract. Regulatory Matters Under the GDPR and local data protection law, specific measures need to be put into place if personal data is to be transferred outside of the European Economic Area (EEA). Thus, should the IT service provider be based outside the EEA, and wish to access personal data held by the recipient of the service, a data processing agreement will need to be concluded in accord - ance with the European Commission’s Standard Contractual Clauses, unless other safeguards are in place. Additionally, several companies that are subject to regulation demand that particular regulatory
to be considered. Penalty Clauses
IT services agreements frequently involve fines for non-performance or contract violations (for example, a breach of confidentiality or breach of
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