Contractual Liability and Exclusion Clause

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ComLaw 101

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Answer
Issue
Whether Titanic Global Octopus (TGO) can hold UpliftMovers (UM) liable for the damages
suffered by the company and whether Karl and Lennie can recover their damages?
Rule
A contract binds its parties into a legal relationship. They are obligated to comply with the
terms of the contract or else the parties can legally enforce the contractual terms by going to
the court. Thus, the contractual liability is imposed on the parties to a contract based on
which the terms are legally binding upon the parties. However, this liability can be terminated
by the party by including an exclusion clause in the contract. This clause provides that the
party will not be held liable in case the term of the contract is violated. In case a valid
exclusion clause is included in the contract, then the aggrieved party cannot hold another
party liable the damages or claim compensation for the loss suffered due to breach of the
contractual term. However, while including the exclusion clause in the contract, the parties
are required to comply with the general rule of exclusion clause. In the case of Thornton v
Shoe Lane Parking (1971) 2 WLR 585, the court provided that a party cannot just included
an exclusion clause in the contract; it is important that the clause is brought into the attention
of the party (Riefa, 2016).
In this case, a ticket was issued at the entrance of the parking lot, and an exclusion clause was
written inside the parking. The court provided that the defendant cannot rely on the clause
since it must bring into the attention while the contract is forming or before its formation.
Thus, it is the general rule of the exclusion clause without which it cannot be considered as
valid. However, there is an exception to this rule. The court provided in the case of
L’Estrange v Graucob (1934) 2 KB 394 that the clause which is included by the party into a
written contract without the notice of another party is considered as valid. Therefore, a party
is not required to bring the exclusion clause into the attention of another party if it is included
in a written contract which is signed by the party. The court provided that this fact is
irrelevant whether while signing the contract, the term is read by the party or not (Russell,
2012). Moreover, the employees of a company can demand damages for the loss suffered by
them in case a contract is formed between the parties for the same or the loss is suffered due
to the negligence of the company.