Limitation of Liability in Adhesion Contract: A Comparative Analysis between the French Theory of 'Failure of Essential Obligation' and the U.S. Theory of 'Failure of the Essential Purpose'

Abstract

This paper aims to shed light on the French and U.S. doctrines of “failure of essential obligation” and “failure of essential purpose”, and discuss how Courts use them to resolve issues arising from limitation of remedies clauses. The research will compare scholars and courts positions in the United States to the standards adopted in France, where courts instead of referring to the failure of essential purpose and unconscionability doctrines, prefer to rely on the “failure of the essential obligation” in the contract. While in France consideration is only given to the “failure essential obligation” to determine whether the clause is derisory or inapplicable to the circumstance purposed to, the legislator in the United States has developed two ways to resolve these issues: “the failure of the essential purpose” and the “unconscionability”. This paper analyzes the economy of the doctrines retained respectively in France (II) and in the United States (III), by exploring their similarities and potential gaps, and providing for recommendation as to which of the doctrines is better suitable in resolving issues inherent to disclaimer and limitation of liability clauses.