Multiple choice

Fact: Two firms entered into a written contract for the sale and purchase of tissue paper. The agreement contained a clause to the effect that “this agreement is not entered into, nor is this memorandum written, as a formal or a legal document, and shall not be subject to legal jurisdiction in the law courts”. Since the goods were not delivered, the buyers brought an action for non-delivery. Issue: Are the sellers liable?

  1. The sellers are liable as they had entered into a written agreement.

  2. The sellers are not liable as there was no contract as the parties never intended to create legal relationship because they had clearly mentioned that their agreement is not a legal document nor a memorandum nor subject to the jurisdiction of law courts.

  3. The firms may make mutual adjudication.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Jones v Vernon: When parties EXPLICITLY state in writing that their agreement is not a legal document and not subject to court jurisdiction, this conclusively shows lack of intention to create legal relations. Such clauses are binding and prevent enforcement of the agreement.

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