Skip to content

IAI Actuarial Core Principles · Business Management · Implied terms, exclusion of liability, contractual remedies and damages

Bharat Life Re buys a data-analytics licence from TechMine. The contract says the software will be supported by a helpdesk 24x7. The helpdesk is unavailable for two nights in a year, with no effect on Bharat's operations. If the support promise is a warranty, what is Bharat's remedy?

Bharat can claim damages only. A warranty is a subsidiary term collateral to the main purpose of the contract, so its breach does not allow termination; the innocent party must carry on performing and recover compensation for any loss.

  1. ARescind the whole contract and recover the licence fee
  2. BClaim damages only, and continue to be bound by the contractCorrect
  3. CRefuse to pay the licence fee until support improves
  4. DTreat the contract as discharged by frustration
  5. Claim damages and also terminate, as for a condition

Explanation

A warranty is a term collateral to the main purpose. Its breach gives only a right to damages, not a right to repudiate. Terminating or withholding the whole fee would be disproportionate.

Did you get it right without looking?

One question tells you little. A timed set on Implied terms, exclusion of liability, contractual remedies and damages shows your real accuracy, how long you take and where you lose marks.

Practise Implied terms, exclusion of liability, contractual remedies and damagesFree diagnostic mock

More Implied terms, exclusion of liability, contractual remedies and damages questions