Business/commercial law essay question and answers

S sells a car to P. the agreement contains the following clause; “since the car is sold cheaply, on no condition or warranty that the car is roadworthy is given.” The car fails to move from the show room. S insists a legitimate deal has been concluded.

Advise P.

• This problem is based on exemption clauses with specific reference to the concept of fundamental obligation theory.

• It is apparent that the contract of sale between S and P has an exemption clause which S is excluding himself from liability if the car turns out to be unroadworthy. However, the interesting thing is that the car sold S is incapable of self-propulsion, yet S insists that a legitimate deal has been concluded.

• It is evident that S has committed a fundamental breach of contract and hence cannot rely on the exemption clause to escape liability. My advice to P is to institute proceedings against S in damages for breach of contract. Although the exemption clause is an integral part of the contract, it cannot be given effect a court of law as doing so enables S to evade the fundamental obligation of the contract.

• My advise is based on the decision inKarsales (Harrow) Ltd V. Wallis whose facts were substantially similar. It was held that the plaintiff could not rely on the exemption clause to escape liability.

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