A student bought an I-Pod Nano for the stated purpose of listening to his taped notes while he took his daily run. The contract he signed with the seller, Tape Talk Ltd., included a clause excusing the seller from liability for the breach of "any term of the contract, whether a breach of condition or warranty whether express, implied, statutory or otherwise." After only 30 days, the I-Pod failed to function at all. It was totally useless for the student's purpose, so he took it back to the seller. The seller refused to take it back and pointed out the exemption clause in the signed contract. On these facts, which of the following could be true?
A) The student is out of luck because the contract with the exemption clause was in writing.
B) The student could get around the exemption clause by arguing insufficient notice.
C) The student could get around the exemption clause by the court's strict interpretation (construction) of the clause.
D) All exemption clauses are illegal, and therefore the student would not be bound by this one.
E) The student could be awarded damages if the exemption clause were found invalid by the court on the grounds that the clause could not be interpreted to mean it would forgive such a fundamental breach.

Question

Quizplus · Accepted Answer

Exemption clauses are not inherently illegal but are subject to certain limitations. In this case, the exemption clause in the contract is very broad and attempts to exclude all liability for any breach of the contract, including breaches of condition or warranty. However, such a clause would not be effective to exclude liability for a fundamental breach, where the seller fails to perform a primary contractual obligation. Here, the student has purchased an I-Pod for a particular purpose, and the device has failed to function at all, rendering it useless for its intended purpose. This could be considered a fundamental breach. Therefore, the exemption clause may be found invalid, and the student could potentially be awarded damages.

A Student Bought an I-Pod Nano for the Stated Purpose