LeGAL ASPECTS of contract administration - Assignment Example

Regardless, exclusion clauses are not always enforceable because they do not meet the three-rule test. Exclusion terms are part of virtually every contractual agreement (Culp, 2010). The clauses and related implied terms function by excluding or restricting the entitlements of a party to the contract in the event of a breach (Frey, & Frey, 2000). For instance, if a party to a contract intends to restrict his or her liability, the party is expected to incorporate an exemption clause restricting the amount of reparations that they will be willing to part with in relation to a clearly defined total amount of damages (Round & Shanahan, 2012).

In a number of cases, a party may incorporate a written term seeking to exonerate them from any kind of liability for a particular issue that could affect the contract, for example, brittle goods being broken whilst in shipment (Latimer, 2012). This way, exclusion terms function to the advantage of one party to a contract. Generally, an exemption clause in contract law can only be effective if the party relying on it has been reasonable enough in his or her notification of the other party regarding the same (Culp, 2010).

The party consenting to the exemption clause must also be cognizant of its inclusion into the contract. Latimer (2012) notes that to secure its enforceability, the following conditions should be met: firstly, the proposing party can serve notice of the exclusion clause on the other party via actual or constructive means. Actual notice takes place when the offerer actually notifies the other party or when it is apparent in the contract and can be seen by a reasonable person (Scott, 2013). Secondly, constructive notice takes place when the offerer had acted reasonably to notify the other party of the existence of such clauses.

Lastly, courts may be persuaded to resolve any disputes