In New England Country Foods, LLC v. VanLaw Food Products, Inc., the California Supreme Court recently held that California Civil Code section 1668 prohibits contractual limitation of liability clauses that limit liability for harm caused by intentional misconduct.

In pertinent part, Section 1668 provides:

“All contracts which have for their object, directly or indirectly, to exempt anyone from responsibility for his own fraud, or willful injury to the person or property of another, or violation of law, whether willful or negligent, are against the policy of the law.”

Manufacturer VanLaw was sued by a barbecue sauce company that it provided manufacturing services on behalf of, for for allegedly trying to copy its  barbecue sauce and sell it to Trader Joe’s.  New England Country Foods’ claims sounded both in contract and tort.  In response, VanLaw argued that a contract between the parties limited damages for injuries caused by intentional actions and were therefore against public policy.

In response, the plaintiff asserted that the contractual limitation of liability provision was not enforceable pursuant to California Civil Code Section 1668 because it it permitted the defendant to engaged in intentional tortious conduct with impunity.

The applicable limitation on damages clause stated, in pertinent part:

“In no event will either party be liable for any loss of profits, loss of business, interruption of business, or for any indirect,

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