Law Essay Example | Topics and Well Written Essays - 2250 words

Law - Essay Example However, the introduction of numerous statutory instruments and the principles of Judicial Interpretation place restrictions on the use of exclusion clauses. Another aspect of legal disputes in commercial contracts involve the situation where there is damage to property that belongs to one of the parties in the contract after an order is placed. There is a question of which is liable for damage. This paper is in two parts based on the question in the scenario. The first part examines the effectiveness of a clause that AOL has integrated into the contract which excludes liability for several things and how this can be used to relieve AOL for misrepresentation. The second part examines the obligations that AOL owes to Shoeground Ltd in view of shoes that they ordered which have been damaged. PART 1 1.1 Issue The question requires that we examine the ability of Clause 3 to be used to exclude responsibility for misrepresentations. In doing this, there is the need to examine some importan t things: 1. The appropriateness of the use of Clause 3 as an Entire Agreement Clause and what intervening Statutes and Judicial practices can affect the use of the Clause to exclude liabilities for misrepresentations. ... The Misrepresentation Act of 19675, as amended by the Unfair Contract Terms Act 19776 restricts the possibility of using exclusion clauses to limit liability for misrepresentation. Section 3 of the Misrepresentation Act states that if a term in a contract excludes liability for misrepresentation, any remedy available to the other party by reason of such misrepresentation, that term shall have no effect unless it satisfies the requirements of reasonableness in Section 11 (1) of the Unfair Contract Terms Act 1977. This means that in an event of a misrepresentation by one party in a contract, that party cannot rely on any exclusion clause to prevent his liability for misrepresentation. In Overbrooke V Glencombe7 it was held that the need of a principal to disclose restraint of the authority of his agents were not enough to prevent him from the effects of Section 3 of the Misrepresentation Act. This is because the principal stated that he was not responsible for the representations of hi s agents. The court held that the agents were acting in his name as such, the inclusion of a clause limiting their involvement did not make him exempt from Section 3 of the Act. The principal was held liable. However, in some instances, an exclusion clause for liability for misrepresentation could be accepted by the court if it is reasonable. The reasonableness test is laid out in Section 11 (1) of the Unfair Contract Terms Act 1977. First of all, the exemption clause should have been reasonable enough to have intended the terms are the time of the contract8. This means that the term might have been in a way that a reasonable person could have inferred its impact and invested sufficient efforts to do diligent checks. Secondly, the exemption clause for misrepresentation