Why Is the Inclusion of a Limitation of Liability Clause

question 57

Multiple Choice

Why is the inclusion of a limitation of liability clause in a commercial contract considered to be an effective solution for business legal risk management?

• A) It triggers avoidance of liability in standard form commercial contracts.
• B) It creates equity because it imposes the same terms on every customer.
• C) It limits financial responsibility for damages if there is a breach of contract.
• D) It transfers risk from the business owners to the business and its customers.

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Definitions:

Enforcement of Judgment

Enforcement of Judgment refers to the legal processes and methods used to compel a judgment debtor to comply with or satisfy a judgment that has been awarded to a judgment creditor.

Stare Decisis

A legal principle that obligates courts to follow historical cases when making a ruling on a similar current or future case.

Federal Court Decisions

Judicial rulings made by federal courts, including district courts, appellate courts, and the Supreme Court of the United States.

Commerce Clause

The Commerce Clause is a provision in the U.S. Constitution granting Congress the power to regulate trade and commerce among the states, with foreign nations, and with Native American tribes.