Business Law Legal Analysis 2017

Added on - 29 Apr 2020

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BUSINESS LAW2Question 1IssueWhether the exclusion clause inserted in the contract would give rise to liability forLocky under negligence, or not?RuleA case of negligence can be made by one party, against another, when the first partycarries on such work, which has the capacity or probability of resulting in harm for the otherparty, and as a result of this a duty of care is owed. When this duty of care is breached, the caseof negligence can be made (Turner, 2013).Donoghue v Stevenson[1932] UKHL 100 was a casewhere the court held that the manufacturer of a product owes a duty of care to consumers owingto the reasonable foreseeability and proximity between the parties(Latimer, 2012). Where theduty of care is not fulfilled, and there is a contravention of the same, a case made for negligenceresults in the plaintiff being awarded with damages for their loss or harm(Greene, 2013).When a contract is formed, there are different clauses, and terms and conditions includedin it. Exclusion clause is one of the clauses in a contract, through which one of the contractingparties is able to restrict or limit their liability in situation of some occurrences(Mau, 2010). So,the exclusion clause has the power of limiting the liability which is raised from a case ofnegligence or breach of contract, amongst the other things. However, there are certain criteriawhich have to be fulfilled, in order for the exclusion clause to have validity in lawful terms(Clarke & Clarke, 2016). The first requirement is that there is a need for the exclusion clause tobe properly inserted into the contract. This has to be followed by the exclusion clause to be
BUSINESS LAW3brought to the attention of the parties, particularly when the same is covered at some other place(Carter, 2007). Another requirement is that the exclusion clause cannot be against a law, and alsocannot restrict or limit the applicability of any statutory law or of any common law. If theexclusion clause attempts to do so, the clause would not be deemed valid, and would not be ableto protect the party from liabilities(Bonell, 2009).As has been stated earlier, the exclusion clause has to be properly brought to the attentionof the party against whom the same has been inserted. However, the case ofL'Estrange vGraucob[1934] 2 KB 394 presents a different viewpoint. In this case, a cigarette vendingmachine had been bought by the claimant for using it in her cafe. An order form was signed byher where it was stated that the warranties, conditions and other such aspects were not included.When the machine did not work properly, the claimant attempted to reject the same based on theprovisions of the Sale of Goods Acts regarding the goods not being of merchantable quality. Itwas held by the court that the order form had been signed which made the claimant bound by theterms despite the fact that she read the terms of this form or not. Hence, an exclusion clausewhich is covered under a contract and is signed by parties would have legal validity despite thesame not having being read by the signing party(Treitel & Peel, 2015).ApplicationIn the given case study, Locky owed a duty of care to Alan and Bing to take care when heleft after entering the premises. There was proximity between the parties as the action of Lockyhad the capability of harming Bing and Alan. Also, it was reasonably foreseeable that a door leftopen was bound to increase the chances of burglary. Thus, on the basis ofDonoghue vStevenson, a duty of care was owed by Locky to Bing and Alan. And since this duty was not
BUSINESS LAW4upheld, which resulted in the valuable equipment of Bing and Alan being stolen, Locky would beguilty of negligence and would have to compensate Bing and Alan for their loss.However, when the contract was signed between Locky and Bing and Alan, an exclusionclause was covered under it. This clause excluded the liability of Locky from any kind of loss ordamage caused to the customers from breach of contract or otherwise. This contract does notinvalidate the applicability of any law, so it would be deemed as valid. Further, this clause wasproperly inserted into the contract and again this would uphold the validity of the exclusionclause. Lastly, the clause would be valid as the contract was signed by Bing and Alan, even whenthey had not read the exclusion clause, based on the case ofL'Estrange v Graucob. This wouldmean that the liability arising from negligence of Locky would not bind him to compensate Bingand Alan owing to the validity of the exclusion clause.ConclusionHence, from the discussion carried on above, it can be concluded that the exclusionclause would be deemed as valid and Locky would not have to compensate Bing and Alan fortheir loss.Question 2IssueWhether Alan can get compensation from the manufacturer in this case, or not?RuleThe basics of negligence have been explained in the previous segment. And throughDonoghue v Stevenson, it has been shown that a duty of care is owed by the manufacturer to the
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