Business Law Case Study Sample
Business Law Case Study Sample
Sam took his two-in-one blanket to a dry cleaner where she was given a receipt with exemption clauses on its back after submitting the blanket. Explain whether the exemption clause will bind her or not.
First, what are exemption clauses? Exemption clauses provide the ability on one party to be not liable in any certain situations such as the defeat of the party or addressing limits in their liabilities. The exemption clauses became a bad publication because of the misusage of some individuals, which typically results to the loss of the consumers. As a solution to the growing problem and abuse, the court responded by continuously review on the incidents. On the other way, the exemption clause can be use by the two parties to allocate the foreseeable between them. But sometimes, one party can carry the risk, as long as, there is an assurance that the risk that may appear during their contract will not be cause too much damage and/or the price that an individual will pay is low as anticipated.
If we are going to view the law of contracts, it is clearly stated that the obligation between the parties are desired and there is freedom for both of them – enabling them to enter in a contract. The choice of the parties in taking the responsibility is out of the power of the court. This gives an idea that an individual can have freedom in bargaining the existence of the exemption clause in the contract. Either way, the two parties must live the consequences resulted from their bargain and agreement.
In the examination of Sam’s case, the simple problem arrives from learning if the exemption clause will bind her or not. I can say that Sam is bound to the contract if she knows that it is existed and agreed to it before receiving the services. It appears that, if an enterprise offers lower price, they have a purpose in attracting the market. Usually, this preference is transparent and readable to the marketer that is why they are simultaneously lowering the prices but leaving the warranty behind. In addition, the exemption clause in written on the receipt, which means that the services has been paid and the transaction has been fulfilled – regardless to the exemption clause.
The Control of Exemption Clauses
The court is against the exemption clause, not only because it diminishes the value of freedom in entering a contract and the essence of obligation but also in the abuse of exemption clauses. To gain advantage on others, the other party uses this kind of strategy. Most of the firms use the exemption clause as part of their service, so there is no such thing as “freedom of choice”. In addition, the exemption clauses deceived the consumers through the small prints and long description that the people often avoid to read it. The use of exemption clauses are imposed with an aim for the exclusion of liability such as warranties.
A consumer has a right to demand for warranty, and if he doesn’t know this right then, he is easily be bound with the exemption clause. The importance of warranty is to cover the legal means over a service or a product that performs poorly or failed to provide its functions and promise. The positive benefits of the warranty were received by the consumers and the improvement scope of the warranty became popular in a form of warranty coverage or extended warranties. In other ways, there are extended warranties are purchased by consumers and cover parts, as well as possibly labor, for a period beyond the expressed warranty duration. Consumers, accordingly to the Act of warranties are may be willing to pay for better warranty protection which results in consumers may turn to extended warranties as a way of compensating for insufficient express warranty protection. This means that the “freedom of choice” is used.
For Sam, the most obvious defense against the exemption clause is the declaration that there is an unreasonable exemption clause that might turn it to be invalid. This will give emphasis on the right of the consumer to receive the product or services entitled them to. In the legal aspects, the court may again, review any unfair treatment. However, the control that might be imposed in the court contains the danger that the court might distort the rules of incorporation and interpretation just to have the indirect control over the unreasonable exemption clauses.
Consumer Law Warranty and Act [Online] Available at: http://consumer-law.lawyers.com/warranty-law/Consumer-Law-Warranty-FAQ.html [Accessed 02 September 2010].
Exemption Clauses (2007) [Online] Available at: http://www.oup.com/uk/orc/bin/9780199299997/taylor_chap06.pdf [Accessed 02 September 2010]
Kelley, C., & Conant, J., (1991) Extended Warranties: Consumer and Manufacturer Perceptions, Journal of Consumer Affairs, 25(1).
Schwartz, A., & Scott, R., (2003) Contract Theory and the Limits of Contract Law, Yale Law Journal, 113(3)