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The objective of this article is to examine the legal nature of exemption clauses, analyse their relationship to other similar provisions that regulate contractual liability, present classification of exemption clauses and highlight their drafting features. Although contractual terms limiting a party’s liability are common in commercial contracts, in Lithuania they have only been analysed as a type of unfair clauses in consumer contracts. The article states that exclusion and limitation clauses are contractual provisions that aim to exclude or limit contractual liability of the appropriate party in advance, i.e. before such liability occurs. The possibility to incorporate an exemption clause into a contract is derived from the principle of freedom of contract, the non-mandatory nature of civil law provisions and the creditor’s subjective right to void of any of his rights. Exemption clauses are not the only provisions that can influence the liability of the debtor. Other contractual terms, such as force majeure or indemnity clauses, that can also have a similar effect on the liability of a contractual party are well known in legal literature and practice. The author emphasizes that exemption clauses can be classified into two basic types: exclusion and limitation clauses. The latter, depending on whether they clearly aim to limit the consequences of the party’s liability or seek to restrict certain conditions under which liability may occur, can be classified into direct and procedural (indirect) limitation clauses. The use of both direct and indirect terms limiting a party’s liability invokes practically the same legal consequences—the debtor avoids the duty to indemnify the creditor for damages. For the lack of a principle or statutory provision indicating what form of exemption clauses should be drawn up, we may conclude that such contractual terms may be both verbal and written, provided that they observe whatever requirements exist for the form of the main agreement. The article presents three ways in which the exemption clauses may be incorporated into the contract: incorporation by signing a contractual document, incorporation by reasonable notice, and incorporation on the basis of previously established practice between the parties.
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