Legal Implications of Exclusion Clauses in Contract Law

Running head: CASE STUDY ASSIGNMENT
CASE STUDY ASSIGNMENT
Name of the Student:
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Author Note:

1CASE STUDY ASSIGNMENT
Issues:
The issues to be determined in this case study involve what are the legal implications for
Homer and how the exclusion clauses are to be regulated by law.
Rules:
In the contract law, the terms of the agreement contain the rights and liabilities of the
parties to the contract (Robertson 2016). Before any agreement is converted in to contract, the
parties discusses about the terms and conditions that will be imposed on the parties after the
contract is formed. The statements made between the parties during the negotiations can either
amount to a term of the contract or to a representation. It is necessary for the parties to
understand whether any statement made during the negotiations is a contractual harm or if it is a
statement. The knowledge of this differentiation is required to be known to know the proper
cause of action together with the remedy available to the parties. If such a statement appears to
be a term of the contract and such term is not fulfilled, then the aggrieved party can sue for the
violation of the contract or for the contract breach (Stone and Devenney 2017). On the other
hand, if the statement appears to be mere representation by the party and if such representation
appears to be fraudulent or false, then the innocent party can sue the other party for
misrepresentation (Poole 2016). The remedies available to the aggrieved party also vary for
terms and representations.
In order to differentiate between the terms and representation, the court usually considers
few factors which are as follows:
 The Parole evidence rule.

2CASE STUDY ASSIGNMENT
 Parties’ relative expertise.
 Significance of the statement.
 Time factor.
Where the contract is in writing, only the terms that are included in the written document
are to be considered as terms whereas the verbal statements amount to representations. This is
called as the parole evidence rule. It is used as evidence in England as seen in Henderson v
Arthur [1907] CA.
Another rule that the court may consider while deciding whether a statement is a term or
a representation is the relative expertise among the parties. If the representor has better
knowledge, understanding or expertise, it is likely to be treated as a term of the contract (Marsh
2017). On the other hand, if it is seen that the representee has greater understanding, knowledge
or expertise than the representor, then it is more likely to be representation. It was analyzed in
the Oscar Chess Ltd v Williams [1957] 1 WLR 370 Court of Appeal case.
In this case of Oscar Chess Ltd v Williams, Mrs Williams bought a second hand car
Morris considering it to be a 1948 model. The document of registration showed that it was
registered in 1948. The next year her son planned to exchange the Moris for a brand new
Hillman Minx. Her son stated at Oscar Chess that the car was 1948 model and based on it Oscar
Chess offered 290 pounds off on the price of the Hillman. William will not be able to purchase
that particular car model unless he availed the discount provided by Oscar Chess. However, after
8 months, Oscar Chess discovered that the car of Mrs William was actually a 1939 model and as
a result the net price of the car was much less that calculated. They sued for the contract breach