Abstract:
The legal status of insertion of exemption clause in the contract is a need of time and Pakistan’s
contractual legal regime is lagging behind, substantially the legal mechanism should be developed
after comparison with other legal best practices.
A party entering into a contract which may exclude or limit the liability after breach of a contract under
particular situation, in such situation the exemption clause strictly restricts the liability which may arise
from the legal relation. Usually in a contract one party is drafting a contract and is protected from being
sued from the other contractual party for damages loss damages and nonperformance of its liabilities
are severely restricted. Use of exemption clause in a foreign document in term of trade which accepts
the no liability for any sort of injury to the customer until and unless it is proven that the injury has
took place directly by the negligence or mistake. However the court interperate this clause narrowly
and it disfavors.
The freedom of contract implies, freedom to incorporate any terms in a contract even including the
terms excluding contractual liability. The opportunity and possibility of exclusion of contractual
liability by the party in an agreement having greater bargaining powers in a contract. The phenomenon
became well marked by the coming into existence of standard form contracts, where the party having
lesser bargaining powers than the other party in an agreement which the stronger party having stronger
bargaining powers has invariably limit or exclude his/her contractual liability in such cases court and
some other legislature has to come for the help of weaker bargaining position (weaker part).
