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Irrespective of the fact that a contract is a voluntary, legally binding agreement, there are circumstances where the courts can interfere in the construction of a contractual agreement, outside what is written by the parties. Freedom of Contract The guiding principal of all contractual agreement is freedom of contract . In the case of Mitchel v Finney , two parties entered into a contractual agreement in which they exercised their right of freedom of contract hereby stating the obligations they wish to bind them. There was a breach in the contract. The issue that arose is whether the obligations as stated in the express agreement by the parties should determine their rights and liabilities. Ordinarily, parties to the contract are bound by the expressed term in the contract. If the contract is in writing, it cannot be varied by an oral agreement. In the past, there had been instances where parties excluded their liabilities in writing, but the court held that the defaulting party cannot rely on the exclusion clause in the agreement. This is especially when there is a fundamental breach. However in the photo production case , the court gave the final quietus to the doctrine that a “fundamental breach” of contract deprived the party in breach of the benefit of clauses in the contract excluding or limiting his liability. This decision respected the doctrines of freedom of contract, irrespective of whether the breach is fundamental. In Mitchel v Finney (supra) there were limiting clauses and a fundamental breach. Instead of allowing the doctrine of freedom of contract to ride, the house of Lord per Lord Bridge considered a modern statutory provision giving the court power to override contractual terms excluding or restricting liability, which depends on the court’s view of what is “fair and reasonable ” Evolution The importance of Lord Bridge’s decision are two fold (a) Statutes can limit the rights and liabilities of parties to contract, (b) discretion of the court can come in aid in construing a contract as the test for what is “fair and reasonable” is subjection. Section 55 SGA, 1979 relates to schedule II of the unfair contract Act 1977 in the sense that the former is subject to the latter. In other word, even though a party executes a contract when an attempt is made to obviate the rights, duties and liability is sale of goods implied by law, the extent to which a party that intends to rely in the avoiding the implied terms must cross the hurdle set in schedule II of the unfair contract Act. Conclusion Parties are free to enter into contractual relations. But this freedom is restrained by statutes, and the courts. The statutes ensure that a defaulting party does not escape liability by the mere fact that he cleverly inserted provisions which will relieve him of any liability in an event of breach. The courts in using the naturalist approach of interpretation endeavour that an injured party gets justice.
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