Question

14 multiple choice 1 point aaa and xxx companies are both major international conglomerates. they are negotiating a contract whereby aaa will install a computer system for xxx. one clause in the contract states that aaa will not be liable for damages caused by the negligent installation of the computer system, except that aaa warrants the system and will fix any problem for a period of two years following installation. aaa completes the installation of the computer system. xxx loads extensive amounts of information on the system, but all of it is destroyed because aaa negligently installed the memory chips. aaa fixes the memory, but xxx incurred significant expenses in recreating the lost information. xxx sues for these expenses. aaa defends with the noted clause in the contract. xxx wins; these types of clauses are never enforceable. xxx wins; exculpatory clauses are sometimes valid, but this one would not be valid. xxx wins; this exculpatory clause is not valid because it is unconscionable. aaa wins; this exculpatory clause is enforceable.

Explanation:

Exculpatory clauses that attempt to relieve a party of liability for its own negligence may be found unenforceable if they are unconscionable. In business - to - business contracts between sophisticated parties like major international conglomerates, courts are more likely to enforce such clauses. Here, the clause is likely enforceable as it is a negotiated term between two large, presumably sophisticated companies.

Answer:

AAA wins; this exculpatory clause is enforceable.