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Business Law : Exclusion Of Liability

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Discuss about the Business Law for Exclusion of Liability.



The relevant issue in the present factual scenario is whether Charlie and Ali are legally bound or not. Charlie and Ali are not legally bound as they are brother and sisters and hence they cannot be held to be legally bound in law. Charlie and Ali have mutually agreed to the terms of the contract whereby Charlie is prohibited from opening another flower shop. Therefore, it can be said that they have a contractual obligation towards each other. Another issue to be considered is whether Ali can sue Charlie for breach of contract.

In contract law, the most important thing to consider is whether the parties had the intention to create legal relations and if they had the intention to be legally bound by the terms of the contract. in cases where it is found that the parties did not have a legally binding contract, the contract will get the color of a domestic agreement (Nijland 2016). Domestic agreements are entered into between relatives and family members and they are not used for commercial transactions. For a court to adjudge if there existed a contract between the parties and whether they are bound by the terms of the contract, it is imperative for the parties to have a written agreement. If there is a written agreement, it is easy for the court to declare that the parties were bound by the contract.

A relevant case in the present scenario is Balfour v Balfour [1919] 2 KB 571, where the husband was sued by his wife for not keeping his promise. The husband had orally promised and the court found that the oral agreement was not enforceable and the agreement between the husband and wife is a domestic agreement and therefore it could not be enforced. Again, in the case of Todd v Nicol [1957] SASR 72, the court held that the written agreement between the parties was enforceable and they had the legal intention to enter into a contract (Ibrahim et al 2015). The letter inviting one party to stay at another party’s place is a written agreement and the parties had the intention to create legal relations. In this case, the court held that the domestic agreement between the parties was enforceable and is administered by contract law.


In the present case, Charlie is found to be in violation of his contractual obligations. He has breached the contract by setting up another flower shop against the decided agreement between the parties. In this case, the principle of Todd v Nicol [1957] SASR 72 will apply wherein it will be held that the parties are bound even though it is a domestic agreement.

The issue in the present case is whether Nick has to pay the extra charges to the Police Department for the service they have provided. The issue identified in the case is if Nick is liable to pay in the backdrop that the Police have done his job as a protector.

In a contract entered between the parties, consideration is the sum that is paid by one party to the other to make the contract legally enforceable. A contract is valid if there is no consideration. Australia follows common law and under common law consideration is given emphasis (Brewer et al 2016). In cases when the consideration is made by a police officer, it will not be held to  be a valid consideration because the police is executing his own duties and in cases of execution of public duty, a consideration is not counted. In cases when the police provide duty in excess of its prescribed duties, it will be an exception to the rule of consideration in public duty. In those cases when the duty has exceeded, it will considered a valid consideration.

Stilk v Myrick [1809] EWHC KB J58 is an important case dealing with consideration. ,this English Contract Case deals with the essentiality of consideration. In this case, the court held that the service executed by the crewmen demanded a consideration and since the agreement did not have any consideration, it was held that the agreement was void of consideration (Shatritz, Borick and Russell 2016). In the case of Glasbrook v Glamorgan CC (1925) the police executed service in excess of its prescribed service and mounted service guards in the belief that the company shall the consideration for the extra service provided. Breach of contact occurs when one party fails to hold his side of the bargain (Rushin 2016)


Nick will not succeed in his claims against the police department because even  though  the police has exercised his duties to protect him, he has been made to work in excess of his duty and in such cases, the consideration needs to be paid. Applying the principles of Glasbrook v Glamorgan CC (1925) and Ward v Byham, that asking police to work in excess od his public duty needs extra effort and therefore he deserves to be paid extra. Asking the police to guard him at night was within the duties of the police but the extra duty was in excess of his services and therefore he had to be paid for the services he provided.

The issue in this case is whether part payment a legal way to give effect to a contract and make it valid. The issue to be considered in this case is will Helen sue Mike for the outstanding amount even though she has asked Mike to check the steering wheel of her car in return of the non payment of the debt.

Going by the rules of part payments of debts, if a part of a debt is paid as settlement, then the part payment shall not be considered valid in law. In cases when the part payment is associated with any other payment which is done by one party to the other before the due date approaches, it shall be considered a valid consideration (Collins 2017).

In the case of Pinnel (1602) 77 ER 237, it was held by the court that there was a part payment and it had been executed in favour of the party. The Court considered that the part payment will be held to be valid consideration only if the part payment has been done and the rest can be paid with the help of additional fixtures before the due date passes. Another similar situation arose in the case of Foakes v Beer [1881–5] All ER Rep 106 where the pre-existing duty rule was considered in cases of part payment of debts (Ajzerle 2015).

In this case, it cannot be said that Mike has breached his contractual obligations. Helen cannot bring a case of breach of contract against Mike. Mike has already made the aprtial payment of the debt on time and after taking instructions from Helen, repaired the car according to the agreement made between the parties. Therefore, working on Helen’s car clears the debt that Mike owed to Helen and therefore the agreement is such that Mike’s debt is cleared.

The issue in the present case is whether Lizzie has to pay the extra amount of $20 for keeping the DVD beyond the stipulated time and whether there was a contract between the DVD shop and Lizzie.


It is a settled principle of contract law that whenever parties try to exempt themselves from any liability in cases of unsigned contract. Whenever an usual term in included in the contract, the owner has to take extra precaution so that the other party entering the contract becomes aware of it.

Spurling v Bradshaw Ltd in this case it was held that in cases of unsigned contract extra care needs to be taken to make the other person clearly understand his liabilities. The court in the landmark judgment upheld the concept of “unreasonable contract” stating in cases of contract that do not meet the normal eye, the owner has to make it more understandable by marking it specially with a red ink (lee and Tang 2015). Therefore those contracts need to be made visible called the “red hand rule”

In this case, the DVD shop will not win against Lizzie because lizzie saw the advertisement giving out the details of the membership but did not mention the unusual terms. The unusual terms were not explicitly mentioned and therefore there was no breach of contract. the terms should have been made aware to Lizzie which the owner failed to do.

Issue: the issue in this case is whether Tori has the right to claim damages from the dry cleaner for the damage done to her dress. Whether the exclusion clause is valid for enforcement of liability is the issue in the factual case.

The exclusion clause helps in excluding the liability of a person in a contract. This is a saving clause that saves the party from incurring liabilities. If the party has signed the exclusion clause, he cannot claim damaged later. This principle governs the fact that if a party being aware of the exclusion clause enters into a contract he cannot claim damages.

In the case of L'Estrange V Graucob [1934] 2 KB 394it was held that after signing the contract, the parties are bound by the terms of the same and therefore later cannot claim that they were not aware of it. This principle helps the party from escaping liability (Ahmad and Malkawi 2017).

Tori cannot win the case against the dry cleaners because there was a contract between the parties and there is no way the dry cleaners can state that Tori were not made aware of the terms of the contract.  The dry cleaners had explicitly mentioned the exclusion clause in the contract and therefore there was no misrepresentation. Tori is bound by the terms and cannot sue the dry cleaners for the damage done to the dress.

The issue in the present case is whether Mr Smith can be sued by Sandra for giving her wrong information and whether there was an implied contract between Sandra and Mr Smith regarding the quality of the product.


According to section 19 of the Good Act 1958, there is an implied warranty that is attached to the quality or fitness o a product. In such cases the liability can be fixed. In cases when an expert gives his opinion based on the requirement of a party and if based on the opinion of the expert, the buyer buys the product, the expert shall be held liable (Sims 2016). In such cases, it is important to note whether the buyer has by necessary implications made the expert know the requirements and has also told that he needs an expert opinion. If the expert makes the buyer believe that he has specific knowledge and based on that knowledge the buyer buys the product, he shall be made liable.

David Jones v Willis (1934) 52 CLR 110 held that if the knowledge of the expert helps the buyer buy a product and the product does not meet the requirements, the expert shall be made liable. There shall be a breach of the implied condition that made the buyer believe that the goods were of a particular quality (Stoop and Taylor 2014).


Sanders will win the case against Mr. Smith because Sanders believed on the expert opinion of Mr Smith and the quality of the product was not up to the mark. The copier was working slowly thereby Mr Smith had given wrong information and he had a duty to exercise proper skill and judgment in giving the opinion. Since Sanders based her buy on the expert opinion of Mr Smith, he shall be held liable for giving wrong information about the quality of the product.



Ahmad, Z. and Malkawi, B.H., 2017. The burden and order of proof in WTO claims: evolving issues. International Journal of Law and Management, 59(6), pp.1220-1235.

Ajzerle, S., Brimble, M. and Freudenberg, B., 2015. A (W) hole in the Financial Budget: Budgeting's Influence on the Effective Use of Credit Card Debt in Australia.

Brewer, J.D., Wilford, R., Guelke, A., Hume, I. and Moxon-Browne, E., 2016. The police, public order and the state: policing in Great Britain, Northern Ireland, the Irish Republic, the USA, Israel, South Africa and China. Springer.

Collins, D.M., 2017. Part-Payment of Debt: A Variation on a Theme?. International Company and Commercial Law Review, 28(7), pp.253-258.

Ibrahim, N., Asuhaimi, F.A., Abd Ghadas, Z.A. and Zakariah, A.A., 2015. The Application of Contract Law Principles in Domestic Contracts. Pertanika Journal of Social Sciences & Humanities, 23.

Lee, F.C.J. and Tang, V., 2015. Exclusion of Liability and Unfair Contract Terms in Hong Kong Travel Contracts: Problems and Solutions. Journal of Law, Technology and Public Policy®, 1(3).

Nijland, H.J., 2016. Disentangling the domestic contract(Doctoral dissertation, Wageningen University).

Rushin, S., 2016. Police union contracts. Duke LJ, 66, p.1191.

Shafritz, J.M., Borick, C., Russell, E.W. and Hyde, A.C., 2016. Introducing public administration. Routledge.

Sims, A., 2016. The guarantee of delivery of goods under the Consumer Guarantees Act 1993 and its implications for Australia.

Stoop, P. and Taylor, H., 2014. Aspects of Unsolicited Goods or Services in Terms of the Consumer Protection Act 68 of 2008: An Analysis.

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