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:

Franchise Acquisition

The process of acquiring the rights to operate a business under an established company's brand and system.

Research And Development

Activities related to the innovation, improvement, or development of products or processes.

Straight-Line Depreciation

A method of allocating the cost of a tangible asset over its useful life in a linear fashion.

Delivery Equipment

Assets such as trucks and vans used by a company for the purpose of delivering products to customers.