Question

Should courts always uphold limitation-of-liability clauses, whether or not the two parties to the contract have equal bargaining power or not? If a court didn't uphold a limitation-of-liability clause, how would that affect those clauses in contracts moving forward?   Please discuss a business situation or dispute that underscores the importance of either upholding a limitation-of-liability clause or allowing a court to strike the clause.

Initial posts are to be 150 words or more and demonstrate your knowledge of the material. Use your textbook, credible outside sources, and personal experience and observations to enhance your post and capture the most possible points.

Answer 1

Answer:

No, the court should not always uphold limitation-of-liability clauses, because this should be carried out as per the parties view involved in the contract. This is the additional feature in the contract which help to limit the liability of the party for the foreseen and unforeseen damage liability in the contract for any of the party. So the court should not always uphold the limitation of liability clause and it should be left to the party’s choice for the specific cases and situations.

There may be possibility that whether or not the two parties to the contract have equal bargaining power or not. It also depends upon the bargaining power of the two parties. If the two parties are having equal bargaining power then they may select the upholding of the limited liability clause in the contract. If the parties are not have equal bargaining power, then legal team can advise to weaker party to review it from the limited liability clause angle as well.

If a court didn't uphold a limitation-of-liability clause, then it would affect those clauses in contracts moving forward that the liability will be as per the contract clause and the clauses mentioned in the contract will be applicable and liable to the parties. The parties need to comply with the liability clauses.

The business condition of warranty of the products, the imitation liability clause will help the manufacturer to limit their liability up to the damages of the cost of the products only. It will not cover the consequential damage and their cost by the manufacturer. Example- if we supply a component for car engine, then the component got damaged and consequentially it damaged engine of the car a well. But with the limitation of liability clause, the manufacturer will be liable for the component cost only and not for the engine damage cost.