Privity and exclusion clauses

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In general an Exclusion clause in a Contract acts to defend one of the parties, usually for consequences of a Breach of contract or Negligence. The clause describes a relationship between the contracting parties. It is sometimes desirable to extend an exclusion clause to parties outside the contract. For example, a company may wish to protect contractors that it employs. On the whole, however, Privity Of Contract acts to restrict the effect of such clauses on third parties.

The courts usually try to enforce a contract in the way the contracting parties intended. For example, if I sign a contract to the effect that I indemnify you and your agents, and I do so of my own free will, then clearly I have an obligation to do so. In some cases the courts are able to find ways to enforce the parties' intentions without offending any legal principles, although tortuous logic may be required (see: The eurymedon (1975)).

Contract Law