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Report No. 103

4.3 How the problem is dealt with in the U.S.-

The position in United States is stated in section 575 of the Restatement of Law of Contracts thus1:

(1) A bargain for exemption from liability for the consequences of a wilful breach of duty is illegal, and a bargain for exemption from liability or the consequences of negligence is illegal if:

(a) the parties are employer and employee and the bargain relates to negligent injury of the employee in the course of employment, or

(b) One of the parties is charged with a duty of public service, and the bargain relates to negligence in the performance of any part of its duty to the public, for which it has received or been promised compensation.

(2) A bargain by a common carrier or other person charged with the duty of public service limiting to a reasonable agreed valuation of the amount of damages recoverable for injury to property by a non-wilful breach of duty is lawful.

1. Section 575, Restatement, Contracts.

Unfair Terms in Contract Back

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