An exculpatory clause is a clause of a contract in which one of the parties releases the other party from liability for their actions. An exculpatory clause may or may not be considered contrary to the public interest depending upon what field the party seeking the release of liability typically operates.

A contractual clause which limits liability is not automatically grounds that the contract will be declared unenforceable during a contract dispute. Limited liability clauses are permitted in many contracts. The only time they may become an issue is if the contract dispute involves an exculpatory clause that seeks to invalidate the liability claim regardless of which party is at fault.

An exculpatory claim in which the liability for all personal injury or monetary damage will frequently be upheld if the party seeking relief is a private business, such as an amusement park, health club, or general recreational facility. Relief is often granted from suits filed against parties that are not considered essential to the public good or involved in public health. For these types of companies, exculpatory clauses are generally held to be enforceable. 

A contract dispute with a public utility company, a bank, or a company which carries public goods in which an attempt is made to invoke an exculpatory clause is usually bound for failure. The courts have generally invalidated exculpatory clauses in these contracts because of the belief that allowing these companies to escape liability would be detrimental to the public good.

If a lease contains an exculpatory clause it may be enforceable or unenforceable depending on the purpose for which the property is leased. If an exculpatory clause is present when there is a contract dispute regarding the lease of a commercial property, the exculpatory clause will usually be enforced.

If the property is residential, the exculpatory clause in the contract dispute will usually be considered unenforceable by the courts. This distinction is made because it is generally considered more detrimental to the public good to inflict harm against individuals than is harming a commercial enterprise.

An unconscionable contract is unenforceable. It is immaterial whether a waiver is explicit or implicit. Procedural unconscionability also gives rise to an unconscionable contract if one of the parties is in a vastly superior bargaining position.

An unconscionable contract may also contain substantive unconscionability if the terms of the contract are excessively harsh or would be oppressive to implement. An unconscionable contract can also result if the party selling the goods marks up the price tremendously and attempts to hide how great the mark up is.

Whether a contract is conscionable or unconscionable can only be determined by a judge and never by a jury.

A severable contract is a contractunenforceable that can still remain in effect despite those provisions which are void. In order for the blue pencil test to be satisfied, the phrase stricken by the court must not result in a change to the purpose for which the contract was created by the parties. The contract must still make grammatical sense after the edits have been made to the contract. Otherwise the contract will not be considered to have become a severable contract.

A severable contract can be formed if the parties who entered into the contract do not consider it essential that all the actions be performed together. Divisible contracts may exist if a convenience store orders the soda, chips and candy it sells from the same company in three separate clauses. An indivisible contract is formed if the store hired a vendor to provide the soda, chips, and candy in a single clause. 

Whether divisible contracts or indivisible contracts have been formed can often be determined by examining the terms under which consideration has been provided. If the set of contracts provide the consideration in a lump sum, it is usually an indivisible contract. If consideration is itemized for each thing exchanged, a severable contract often exists.

If a contract contains both legal and illegal clauses, the court will attempt to enforce only the legal clauses in the event the contract is already a severable contract. If the court can employ a blue pencil test to create a severable contract, it will.

In order for an allegation of fraudulent misrepresentation to be sustained there must be an intent to deceive on behalf of the accused party. The element of intent also requires that the deceiver must know that the information they are spreading is false or that the withholding of the information would constitute a fraudulent action.

The technical term for this intent to do wrong is known as scienter. Scienter is related etymologically to the word science. Both words refer to the possession of knowledge.

Laws concerned with fraud in contracts may find that scienter exists if one of the parties to the contract knows that one of the material facts that affect the contract in question is not true as they are stated in the contract.

Scienter is also determined by laws governing contracts to exist if one of the parties to the contract makes statements without any regard to whether the statements they utter are true or false. Laws regard this willful ignorance of the validity of the individual’s statements to rise to the level of fraudulent representation.

Scienter may also be found to exist if the party accused has claimed that their statements are based on personal knowledge or research when this knowledge or research has no actual basis in reality.

A person is assumed to have the capacity to enter into a contract. An intoxicated person, minor, or mentally incapable person has two options available to them after entering into a contract which affects the validity of the contract into which they have entered. The first option they have is to disaffirm a contract. Disaffirming a contract reveals a desire by an individual to no longer be bound by the contract. The disaffirmation can be verbal or active.

The other action that can affect the validity of a contract is ratification. Ratification reveals a willingness to be bound by the terms of the contract. As with disaffirmation, ratification can be verbal or active. If a person continues to use an item after they would otherwise be released from the contract, they have ratified the contract by action.

Ratification takes precedence over disaffirmation. If a person attempts to disaffirm a contract from which they have already received substantial benefit, the courts will not allow them to disaffirm the contract. The fact that the individual has benefitted from the contract is considered proof of acceptance to being bound by the contract.

It is impossible for anyone to disaffirm a contract they entered into in order to obtain essential services. Contractual obligations for necessary services cannot be avoided under any circumstance.

Contracts that are adjudicated to be contrary to public policy may result in portions of the contract being declared unenforceable.

An exculpatory clause is a provision of a contract that releases one party of the contract from all liability no matter who is at fault. Exculpatory clauses are normally permitted to remain in effect if the contracted party is engaged in an enterprise that is not considered essential to the public good, such as the operation of a recreational facility. However, with a clause that releases a company from liability which functions in a business that is considered essential to the public good, the courts w

Fraudulent misrepresentation by silence may result during a long contract negotiation if one of the parties to the contract withholds material information they learned during the negotiation process.