Advanced Business Law: The Limitatio Justus Home

In a contract, the parties may wish to limit the scope of what each can claim for. They can do so by using a clause, often called an “exemption clause” which limits each party’s liability to that which is set out in the contract.

An exclusion clause must be clearly shown to be incorporated into the contract using clear, unambiguous language. If there is any doubt or ambiguity in the clause, then the clause will be interpreted against the party relying on it, that is, the party seeking to limit its liability. That is known as the “contra proferentem” principle.

The limitation of liability clause simply places a fixed cap on a number of damages that may be recovered against a contracting party in the event of a claim. Generally courts hold that such clauses are not per se against public policy.

1. What did the seller here limit itself to do in case of defects? What was the

(p.474) The limitation-of-remedies clause was ineffective because the remedy as thus limited failed of its essential purpose. The problems that the house had could not be remedied by repair or replacement of the parts. (Advanced Business Law and the Legal Environment, 2014)

2. Did Justus Homes disclaim implied and expressed warranties with its contract language regarding limitation of remedies?

Yes, but the limitation of remedies clause was useless because the clause failed its essential purpose the log cabin still leaked and the parts were defective therefore Justus Homes did not fully restore the log cabin to the way it was promised.

3. Was the essential purpose of the limitation of remedy to protect the party benefiting from it – here, the seller of the log home kit – or was the essential purpose of the limitation of remedy, as the court said, “effective enjoyment of implied and expressed