CIPS L4m3 Commercial Contracting · Free Practice Question Medium
Question 10
What is the name of the clause that frees the parties from their contractual duties when unexpected events like natural disasters or terrorist attacks happen?
-
A
Indemnity clause
-
B
Exclusion clause
-
C
Insurance clause
-
D
Liquidated damage clause
Reveal correct answer
Correct answer: B
Explanation
The contract provision that relieves the parties from performing their contractual obligations when certain circumstances like natural disasters, terrorist attacks, etc arise is called Force majeure. Force majeure is an example of exclusion clause.
An exemption clause in a contract is a term which either limits or excludes a party’s liability for a breach of contract. In order for an exclusion clause to be binding and operable upon the parties, the clause must:
1. The clause must be incorporated into the contract as a term.
2. The clause must pass the test of construction.
3. The clause must not be rendered unenforceable by the statutory provisions in the Unfair Contract Terms Act 1977 or the Consumer Rights Act 2015 (enacting the Consumer Rights Bill 2013-14).
Reference:
- CIPS study guide page 149
LO 3, AC 3.2
Discussion
Think the marked answer is wrong, or have a better explanation? Share it below — comments appear after review.
