ComLaw 101: Analysis of Contractual Liability and Exclusion Clauses

This case study, prepared for ComLaw 101, examines a scenario involving a contract between Titanic Global Octopus (TGO) and UpliftMovers (UM) concerning the transfer of equipment. The core issue revolves around whether UM is liable for damages to TGO's equipment caused by their driver's fault, considering an exclusion clause limiting liability to $1000, while the actual loss is $30,000. The analysis applies legal principles related to contractual liability and the validity of exclusion clauses, referencing key cases like Thornton v Shoe Lane Parking and L’Estrange v Graucob. Additionally, the case considers whether employees, Karl and Lennie, can recover damages for their personal belongings damaged during the move, exploring the absence of contracts regarding their personal property. The conclusion finds UM liable for $1000 based on the exclusion clause and denies employee claims due to the lack of relevant contracts.

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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.

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Application
In the given case study, a contract is formed between TGO and UM regarding transferring of
the equipment from old office to new office. Due to the fault of UM’s driver, the equipment
of TGO was damaged due to which the company suffered a loss. While claiming for the
compensation, UM relied on the exclusion clause which is included in the contract formed
between the parties which provide that the company will only be liable for $1000 whereas the
actual loss of TGO is $30,000. TGO can rely on the general rule of exclusion clause to argue
that it is not brought its attention based on which it cannot be considered as valid (Thornton v
Shoe Lane Parking). However, as per the exception is given under L’Estrange v Graucob
case, UM can argue that it did not owe a duty to bring the clause into the attention of TGO
since a written contract was formed between the parties. Therefore, the exclusion clause is
valid based on which TGO can hold UM liable for only $1000. Moreover, in the case of
employees, they can file a suit for recovery of damages against the company for the loss
suffered by them. However, in case of Karl, the company only encouraged its employees to
bring their personal computer, and no contract was formed between the parties regarding
protection of the personal computer. In the case of Lennie, the ring was brought by him
without the permission of the company. Since no contact has formed between the parties,
they cannot hold TGO liable for the loss suffered by them.
Conclusion
In conclusion, TGO can hold UM liable for $1000 only as per the exclusion clause.
Moreover, the employees cannot demand damages from the company since no contract has
formed between the parties regarding the safety of their personal belongings.

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References
L’Estrange v Graucob (1934) 2 KB 394
Riefa, C. (2016). Consumer protection and online auction platforms: Towards a safer legal
framework. Abingdon: Routledge.
Russell, C. A. (2012). Opinion Writing In Contract Law. Abingdon: Routledge.
Thornton v Shoe Lane Parking (1971) 2 WLR 585