By Dr AbdelGadir Warsama Ghalib, Legal Counsel
Drafting of contracts require certain skills and capabilities, as instances of inappropriate drafting are treated as a major legal risk. What you write by yourself could fire back on you with great losses and damages.
Where a clause is duly incorporated into a contract and there are conflicts regarding the interpretation of such clause, the Courts will normally examine the words used to see if the clause covers the breach and loss which has actually occurred. In such instances the main rules used by the Courts, include “strict interpretation” where, an exemption clause will be effective only if it expressly covers that kind of liability which has in fact happened.
For example, a clause, for exclusion of liability for breach of warranty will not provide protection against liability for breach of condition. This is taking in consideration the differences between warranties & conditions in contracts.
Also, if there is any ambiguity or doubt as to the meaning of an exemption clause, the Courts will construe it against the party who put in the contract. Therefore, very clear words must be used before a party will be held exempted from liability in negligence. This goes in line with the rule that, a contract is the will of the contracting parties which represents their intention at the time of contracting. However, such intention shall be put in clear words and perfect drafting.
The Courts can strike out an “exemption clause” which is inconsistent with or repugnant to the main purpose of the contract. Also, the doctrine of “fundamental breach”, was developed in the fight against exclusion clauses which had been properly incorporated into contracts.
According to the doctrine of ‘fundamental breach” no exemption clause, however clear and unambiguous could, as a matter of law, protect a party from liability for a serious or fundamental breach of a contract.
In a famous case, the deft a security company agreed to provide security services to the plaintiff factory. One night the security man lit fire and the fire got out of control and damaged the factory. The deft, relied on an exclusion clause in their contract which stated that they would not be responsible “for any injurious act or default by an employee unless such act or default could have been foreseen and avoided by the exercise of due diligence by the deft.
The Court held that the deft was protected by the exemption clause. Although a breach of contract with serious consequences had taken place, the exclusion clause as a matter of construction, was clear and unambiguous and it covered the “fundamental breach” that had taken place. Moreover, the Court said, in this case the parties had contracted as equals and were clearly in the best position to decide how to allocate the risk of the factory being damaged or destroyed. Herein, there is clear damage, however, going back the contract the liability is exempted.
Beware and be careful, as sometimes, what you have agreed to could work against you. We strongly believe that, utmost care is needed in crafting and drafting free-risk contracts. It is your prime duty when drafting contracts, otherwise, you run the legal contractual risk.
Not only bad drafting or ambiguous wordings or otherwise, nowadays, some people blindly sign ready-made contracts without reading them. Never ever do this please for your own sake & legal protection. Being part of the contract, you have the absolute right to read, understand, amend and or to ask for amendments. Don’t give up this right at all.