QUESTION 3 Foremost Company is a national company that installs computers for ma

Question

QUESTION 3 Foremost Company is a national company that installs computers for major corporations. In all of its contracts, there is a clause that states that Foremost is not liable for damages caused by the negligent installation of the computers. Foremost also operates a factory where the computers are made. Many people work in this factory and every employee is required to sign a release whereby Foremost is absolved from any liability for damages caused by its negligence. Discuss the requirements for an exculpatory clause to be valid and discuss whether these two particular clauses are enforceable. Words:0 Path: p

Explanation / Answer

An exculpatory clause is not legally enforceable if the parties have unequal bargaining power and the clause completely eliminate the liability for negligence particularly when the contract involves a fundamental good or service. In the given case the exculpatory clause would become valid only if it is between businesses with equal bargaining powers and the liability for negligence is not completely eliminated.

When Foremost enters into contract with other major corporations the clause is enforceable as it is between parties with equal bargaining powers and release from liability for negligence is limited to installation related negligence. But in the second contract the release is signed by the employees where the bargaining powers are unequal and it completely eliminate the liabilities of damages caused by their negligence. Hence the exculpatory clause is not enforceable in the second case.

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