Some Problematic Aspects of Interpretation and Validity of Exemption Clauses Cover Image

Atsakomybę ribojančių ar pašalinančių susitarimų aiškinimo ir galiojimo probleminiai aspektai
Some Problematic Aspects of Interpretation and Validity of Exemption Clauses

Author(s): Rūta Lazauskaitė
Subject(s): Social Sciences
Published by: Mykolas Romeris University
Keywords: interpretation of contracts; contra proferentem; validity of contracts; limitation of liability; exclusion of liability; fundamental obligations; fundamental breach; fairness

Summary/Abstract: Once it has been decided that a clause excluding or limiting liability is incorporated into the contract and becomes a part of the agreement signed by the parties, the issue of interpretation and validity of this contractual provision arises. The question is whether the exemption clause is valid, and if so, whether parties, indeed, had intentions to limit liability to such an extent as it could be implied according to the wording of the contractual provision, whether the chosen phrasing of the clause fits the contractual breach that has occurred. Therefore, once it has been ascertained that an agreement limiting liability has been concluded, it is necessary to determine whether the individual clause permits a supposition that the debtor’s liability for other party’s damages is limited or excluded in a particular case. The objective of this article is to analyze the peculiarity of use of contractual interpretation rules for exemption clauses and validity limits thereof, to examine what kind of agreement limiting or excluding liability is treated as unfair and unreasonable. This article reviews the origin and the evolution of the contra proferentem rule as well as the prerequisites for use of this principle. If the exemption clause remains ambiguous after use of all other contractual interpretation methods and the contra proferentem rule cannot be applied because of the impossibility to identify the party who proposed such a contractual provision, in the author’s opinion, it would be fair and reasonable to construe this exemption clause against contractual party which seeks to rely on such a clause in order to avoid or restrict one’s liability. Further, the author analyses the grounds of invalidity of exemption clauses, presents the classification of such grounds, examines the principle of fairness (reasonableness) as a remedy for the limitation of exemption clauses’ validity. The exemption clause should be treated as unfair if it contradicts the basic purpose of the contract, allows a party to default fundamental contractual obligations in such a manner that other party in principle does not receive what it expected from the contract.

  • Issue Year: 3/2011
  • Issue No: 2
  • Page Range: 609-626
  • Page Count: 18
  • Language: Lithuanian