Exclusion of Liability and Consideration in contract

Exclusion of Liability and Consideration in a contract

Introduction

In the UK a common way used by business to apportion risk in a contract is by restricting or excluding liability in the event of default. These exclusions usually may take different forms. While some clauses seek to exclude the liability altogether, others seek to limit the liability in such ways as restricting remedies available or loss recoverable, capping the payable amount in damages in the event of a breach, or imposing a limited time (short) in which claims are supposed to be made. However, in exclusion or limitation of liability, there must be a balance between the principles of contractual freedom against the public policy concerns which holds that any party that freely undertakes a binding contractual obligation is not supposed to be equally free to absolve itself from its contractual duty to perform. To strike this balance, case law and mix statutory rules have been developed in English law, which must be taken into consideration when reviewing or negotiating liability exclusion and limitation clauses. It is on these tenets that the cases between Commercial Vehicle Repairs PLC (CVR) and its two clients, Parsons Plumbing Ltd (PPL) and Bright Sparks Ltd (BSL), is analyzed.

Parsons Plumbing Ltd (PPL) Case Analysis

In a valid business contract, any included exclusion or limitation clause has to be incorporated in the contract, address the liability in question and be within the applicable legislation or cases that regulate its effect. In the case of Commercial Vehicle Repairs PLC (CVR and Parsons Plumbing Ltd (PPL) the exclusion and limitation clauses falls within the regulation of Unfair Contract Terms Act 1977 (Lawson, 2011). Section1(3) (a) of the Act states that it applies to the liabilities that arise for the breach of duties or obligations that arise from the thing that is done by people in the course of business (McKendrick, 2014). In this case, CVR and PPL made the contract in the course of business, where CVR was to repair PPL’s van and truck. PPL is the consumer of CVR’s service under section 1 (12) (a) of the Act given that they were involved in business activity…………………………..

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