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Business ‘Common Sense’ Important When Courts Interpret Limited Liability Clauses

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A recent UK High Court decision, (Polypearl Ltd v E.On Energy Solutions Ltd), emphasized the importance of business common sense in interpreting a limitation of liability clause. The question was whether the words “Neither party will be liable to the other for any indirect or consequential loss, (both of which include, without limitation, pure economic loss, loss of profits, loss of business, depletion of goodwill and like loss) howsoever caused..” excluded liability only for indirect loss, and not for direct loss of profits. The court held it did not exclude liability for direct loss. The article notes that “clear express words must be used in order to rebut the presumption that neither party intends to abandon any remedies for a breach of contract arising by operation of law”, especially not for a loss of profits directly caused by a failure of the customer to purchase the quantity of goods specified in the agreement.

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Take away:

  • When interpreting a specific clause, courts will consider the amount of care and detail used in the drafting of the clause. Courts will also consider ‘business common sense’ when interpreting a game-changing clause, such as a limitation of liability clause.

 

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This article is provided for informational purposes only and does not create a lawyer-client relationship with the reader. It is not legal advice and should not be regarded as such. Any reliance on the information is solely at the reader’s own risk. Clausehound.com is a legal tool geared towards entrepreneurs, early-stage businesses and small businesses alike to help draft legal documents to make businesses more productive. Clausehound offers a $10 per month DIY Legal Library which hosts tens of thousands of legal clauses, contracts, articles, lawyer commentaries and instructional videos. Find Clausehound.com where you see this logo.

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FBI Purchases Hacking Software

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A product sales agreement should generally have a specific product description in the agreement. However, parties may wish to not specify certain features of a confidential product purchase.

The FBI recently purchased a spy hacking product from an Italian hacking company. Although the product was thoroughly described in the agreement for its various features, the agreement failed to acknowledge that that product would be used to ‘exploit’. Vague descriptions of a product in a product purchase agreement may be permitted by both parties in a situation where the outcome could negatively impact national security.

Read the article here.

 

Take away:

  • The product description in a product sales agreement should be descriptive, however, this may not be necessary in a high profile situation or where confidentiality is a primary concern.

 

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This article is provided for informational purposes only and does not create a lawyer-client relationship with the reader. It is not legal advice and should not be regarded as such. Any reliance on the information is solely at the reader’s own risk. Clausehound.com is a legal tool geared towards entrepreneurs, early-stage businesses and small businesses alike to help draft legal documents to make businesses more productive. Clausehound offers a $10 per month DIY Legal Library which hosts tens of thousands of legal clauses, contracts, articles, lawyer commentaries and instructional videos. Find Clausehound.com where you see this logo.

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Where is an Online Product Deemed to be ‘Received’?

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The place of receipt for online products can be confusing since the transaction is made in a virtual space. Courts should take into consideration the technology trends that can have an impact on delivery provisions.

Arguing that the sales transaction is completed when the buyer takes delivery, the article expresses the opinion that for on-line transactions, the place of delivery should be the appropriate jurisdiction for patent law infringement. “The place appointed by the buyer becomes the most important tangible point of connection in an online transaction …therefore, where online transactions are involved, it is preferable to recognize the place of receipt as the place of infringement, rather than the place of the seller’s registered address or the address of dispatch”.

Read the article here.

 

Take away:

  • In an online sales transaction agreement, the place of receipt, and not the place of domicile of the vendor, should be the location of any infringement of the product sales agreement.

 

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This article is provided for informational purposes only and does not create a lawyer-client relationship with the reader. It is not legal advice and should not be regarded as such. Any reliance on the information is solely at the reader’s own risk. Clausehound.com is a legal tool geared towards entrepreneurs, early-stage businesses and small businesses alike to help draft legal documents to make businesses more productive. Clausehound offers a $10 per month DIY Legal Library which hosts tens of thousands of legal clauses, contracts, articles, lawyer commentaries and instructional videos. Find Clausehound.com where you see this logo.

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Transfer of Title in Cuba

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Providing payment for a product before the transfer of title can make for a more efficient trade between a seller and purchaser.

The United States has recently made changes to improve relations between itself and Cuba. One of the resolutions between the United States and Cuba is to facilitate authorized transactions, which will in turn include changes to regulatory definitions. ‘The statutory term “cash in advance” will be revised to specify that it means “cash before transfer of title”. This will provide more efficient financing of authorized trade with Cuba. The ultimate goal of these measures is to provide speed, efficiency, and oversight of authorized payments for product sales between the United States and Cuba.

Read the article here.

 

Take away:

  • When arranging financing for an international product sales agreement, it is important to understand the laws that govern the transfer of title in all relevant jurisdictions.

 

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This article is provided for informational purposes only and does not create a lawyer-client relationship with the reader. It is not legal advice and should not be regarded as such. Any reliance on the information is solely at the reader’s own risk. Clausehound.com is a legal tool geared towards entrepreneurs, early-stage businesses and small businesses alike to help draft legal documents to make businesses more productive. Clausehound offers a $10 per month DIY Legal Library which hosts tens of thousands of legal clauses, contracts, articles, lawyer commentaries and instructional videos. Find Clausehound.com where you see this logo.

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