21-Contract Terms: Exclusion Clauses Flashcards
Exclusion clause definition
A term in contract that prevents one party being liable for a breach of contract
A term in contract that prevents one party being liable for a breach of contract
Exclusion clause definition
Who established that a contract should be considered as a whole rather than through specific terms IOT gauge intentions of contract?
What case?
Lord Halsbury
Glynn v Margetson (1893)
Lord Halsbury established what in Glynn v Margetson (1893)?
That a contract should be considered as a whole rather than its specific terms when understand its intention.
Terms can be disregarded if they conflict with intention of contract.
When interpreting a contract what is the first point to consider?
Case
Language in the contract.
Pink Floyd Ltd. v EMI Records (2010)
What case supports the principle that ordinary English words will mean what they say as long as they’re unambiguous.
Pink Floyd Ltd v EMI Records (2010)
What case supports the principle that if the words are unambiguous an objective test should be applied?
Who said this?
Investors Compensation Scheme v West Bromwich BS (1998)
Lord Hoffman
Investors Compensation Scheme v West Bromwich BS (1998)
Established what?
Who established?
If words are not clear-objective test applied to interpretation of contract.
What would reasonable man interpret to be intention of contract.
What case supports that post-contract conduct is not usually a guide to interpretation?
MT Højgaard v E.ON and Renewables Robin Rigg (2014)
MT Højgaard v E.ON and Renewables Robin Rigg (2014)
Supports what principle regarding contractual interpretation?
Post-contract conduct isn’t not usually a guide to interpretation.
What three things must the court consider regarding the validity of an exclusion clause?
1) Agreement signed-L’Estrange v Graucob (1934)
2) Notice given of exclusion terms in contract-Olley v Marlborough Court Council (1949)
3) Term incorporated as result of previous dealings-Hollier v Rambler Motors (1972)
What case demonstrates that if party has signed agreement they are then bound by it?
Brief Facts:
L’Estrange v Graucob (1934)
Woman bought Cig Vending machine for her Cafe. Didn’t work but she signed agreement excluding liability for such an outcome meaning she could not claim.
L’Estrange v Graucob (1934)
Supports what principle?
If agreement is signed- parties are bound by it.
Woman bought Cig Vending machine for her Cafe. Didn’t work but she signed agreement excluding liability for such an outcome meaning she could not claim.
What case contrasts with the findings in L’Estrnge v Graucob (1934) in that exclusion clauses even when signed can be useless if misrepresentation occurs?
Curtis v Chemical Cleaning and Dyeing Ltd (1951)
Facts: woman signs contact to clean her dress and asks for clarity on exclusion clause stating no responsibility for damage.
Shop attendant says that’s just for beads or sequins.
Woman dress returned with stain but the representation orally given applies instead of the clause.
Curtis v Chemical Cleaning and Dyeing (1951)
What principle does this case support?
Principle: even signed contracts with exclusions can be exempt due to representation given at time of signing.
Facts: woman signs contact to clean her dress and asks for clarity on exclusion clause stating no responsibility for damage.
Shop attendant says that’s just for beads or sequins.
Woman dress returned with stain but the representation orally given applies instead of the clause.
What case supports the principle that notice should be given for an exclusion clause to be affective?
Olley v Marlborough Court Hotel (1949)
Facts: C booked into hotel at reception desk and left keys there to go out. Keys were taken and items stolen from room. Only notice of exclusion clause denying responsibility was in the room therefore no notice was given during forming of contract.
Olley v Marlborough Court Hotel (1949)
Principle: notice of exclusion clause must be given before contract for it to be valid.
Facts: C booked into hotel at reception desk and left keys there to go out. Keys were taken and items stolen from room. Only notice of exclusion clause denying responsibility was in the room therefore no notice was given during forming of contract.
What case supports the principle that previous dealings of the parties does not necessarily validate an exclusion clause?
Hollier v Rambler Motors (1972)
Facts: Previous customer of garage. Dropped car off there but was damaged on the one occasion he didn’t sign a contract. Garage was liable for damage despite an exclusion clause customer had previously signed.
Hollier v Rambler Motors (1972)
Principle: that even previous dealings between parties does not necessarily constitute validity of exclusion terms.
Facts: Previous customer of garage. Dropped car off there but was damaged on the one occasion he didn’t sign a contract. Garage was liable for damage despite an exclusion clause customer had previously signed.
What case demonstrates an early example of a third party not being entitled to exclusion clauses?
Scruttons Ltd. v Midland Silicones (1961)
Facts: contract between carrier and C did not extend to the offloaded of goods (D)
Scrutton Ltd. v Midland Silicones (1961)
What does this demonstrate regarding earlier law on privity of contracts and exclusion clauses?
Example of: exclusion clauses did not used to cover third parties.
Facts: contract between carrier and C did not extend to the offloaded of goods (D)
What case demonstrates a successful evasion of the rule of privity regarding exclusion clauses allowing a third party a defence?
NZ Shipping v Satterwhaite (1974)
Facts: similar in facts to that of Scruttons Ltd v Midland Silicone (1961) except the contract covered third parties that helped the carrier.
NZ Shipping v Satterwhaite (1974)
What does this case demonstrate regarding the Rule of Privity reference exclusion clauses?
Demonstrates: contrast with Scruttons Ltd v Midland Silicone (1961).
Successful evasion of rule of privity regarding exclusion clauses
Facts: similar in facts to that of Scruttons Ltd v Midland Silicone (1961) except the contract covered third parties that helped the carrier.
s1(6) Contracts (Rights of Third Parties) Act 1999
Permit 3rd party to rely on exclusion clauses.
As similar to NZ Shipping v Satterwhaite (1974)
What act and section allows 3rd parties to rely on exclusion clauses?
s1(6) Contracts (Rights of Third Parties) Act 1999
s1(3) Contracts (Rights of Third Parties) Act 1999
How does this relate to exclusion clauses and privity of contract
ID’s third parties as a member of a class or as answering to a particular description.
(D is entitled to exclusion clauses by being involved with contract)
ID’s third parties as a member of a class or as answering to a particular description.
(D is entitled to exclusion clauses by being involved with contract)
What act and section provides for this?
s1(3) Contracts (Rights of Third Parties) Act 1999
s1(2) Contracts (Rights of Third Parties) Act 1999
D May in their own right enforce a term of a contract
3rd party can enforce exclusion clauses by being involved in delivering a contract
D May in their own right enforce a term of a contract
(3rd party can enforce exclusion clauses by being involved in delivering a contract)
What act and section is this?
s1(2) Contracts (Rights of Third Parties) Act 1999
Contra proferentem definition
Where there is doubt about meaning of a term in contract-the words will be construed against the party who introduced the term.
Where there is doubt about meaning of a term in contract-the words will be construed against the party who introduced the term.
Contra proferentem definition
What case is a modern example of the rule of contra proferentem not being required?
Persimmon v Ove Arup and Partners (2017)
Facts: D had to verify contamination of asbestos-terms were clear and unambiguous so there was no requirement for contra proferentem.
Persimmon v Ove Arup and Partners (2017)
Example of: a modern example of contra proferentem not being used
Facts: D had to verify contamination of asbestos-terms were clear and unambiguous so there was no requirement for contra proferentem.
What are the two statutory controls over exclusions clauses?
UCTA 1977-tort and contractual breaches
CRA 2015-consumer rights
What exclusions and limitations are made void by UCTA 1977?
under s2(1)-party can not exclude liability for death or injury caused by negligence
s3-imposes a reasonable test
s6(1)-passing over of title in purchase cannot be excluded (right to sell on etc)
s2(1) UCTA 1977
Party cannot excuse liability for death or personal injury caused by negligence.
s6(1) UCTA 1977
Party cannot exclude the transfer of title with goods (right to sell on etc.)
Party cannot exclude the transfer of title with goods (right to sell on etc.)
s6(1) UCTA 1977
Party cannot excuse liability for death or personal injury caused by negligence.
s2(1) UCTA 1977
s11(5) UCTA 1977
Provides for?
Example case of this provision?
Requires the party who inserted the term justify it is reasonable.
Warren v Truprint Ltd (1986)
Requires the party who inserted the term justify it is reasonable.
s11(5) UCTA 1977
Warren v Truprint Ltd (1986)
What unit and section does this case demonstrate?
s11(5) UCTA 1977
Party who inserted term must justify its reasonableness
Facts: Photo printer lost couples silver wedding picks-couldn’t limit liability as this is unreasonable.
Under s3 UCTA 1977:
What are the 3 tests of reasonableness regarding exclusion clauses and limitations?
s11(1)-exclusion clauses in general-what was known to parties at the time
s11(2)-business to business
s11(4)-limitation clauses
s11(1) UCTA 1977
What test?
Supporting case?
Concerns exclusion clauses. The knowledge test.
Is insertion of term reasonable in light of what was known to the parties.
Smith v Eric S Bush (1990)
Smith v Eric S Bush (1990)
What act and section it supports?
Facts
s11(1) UCTA 1977
Concerns exclusion clauses in general. The knowledge test-reasonable to insert term in light of what is known by parties.
Facts: surveyors tried to claim a defence of exclusion clause for negligently missing something that cost the purchaser money. Exclusion clause not reasonable.
s11(2) UCTA 1977
What test of reasonableness is this?
What are the 5 points to be considered?
Business to business exclusion clauses.
Sale of Goods Act 1979 Supply of Goods and Services Act 1982
1) Relative bargaining strength
2) Inducements
3) Knowledge-of term
4) Likelihood of compliance with excluded term
5) Special order goods
What act and section concerns exclusion clauses in general?
The knowledge test
s11(1) UCTA 1977
What act and section concerns business to business exclusion clauses for terms in Sale of Goods Act 1979 and Supply of Goods and Services Act 1982?
s11(2) UCTA 1977
s11(2) UCTA 1977
Example case for the test provided by this act.
Watford Electronics Ltd v Sanderson (2001)
Facts: Software that D provided failed to work. D used exclusion clause to limit liability to the price of product. Deemed to be reasonable as parties of equal bargaining power.
Watford Electronics v Sanderson Ltd (2001)
What act and section is this an example of?
s11(2) UCTA 1977
Facts: Software that D provided failed to work. D used exclusion clause to limit liability to the price of product. Deemed to be reasonable as parties of equal bargaining power.
What is a limitation clause?
A term in a contract that sets an upper limit on liability for breach of a contract.
A term in a contract that sets an upper limit on liability for breach of a contract.
Limitation clause definition
s11(4) UCTA 1977
Concerns what?
Limitation clauses
What act and section concerns limitation clauses?
s11(4) UCTA 1977
s11(4) UCTA 1977
What are the two criteria?
- Resources available to D to meet liability (if it arises)
- D insurance cover reasonable
- Resources available to D to meet liability (if it arises)
- D insurance cover reasonable
What act and section do these two criteria come from?
s11(4) UCTA 1977
What case is an example of the test of reasonableness in s11(4) UCTA 1977?
George Mitchell Ltd v Finney Lock Seeds Ltd (1983)
Facts: D provided incorrect seeds, costing C greater loss than price of seeds. Limitation clause limited liability to cost of seed-unreasonable as
- seller negligence
- D could have insured for crop failure
- in past D had settled claims above the limitation sum
George Mitchell Ltd v Finney Lock Seeds Ltd (1983)
What act and section is this case an example of?
s11(4) UCTA 1977
Facts: D provided incorrect seeds, costing C greater loss than price of seeds. Limitation clause limited liability to cost of seed-unreasonable as
- seller negligence
- D could have insured for crop failure
- in past D had settled claims above the limitation sum
What are the three main sections which set out bars on exclusion clauses in CRA 2015?
s31
s57
s65
s31 CRA 2015
Limits exclusion clauses in what sections?
s9-Satisfactory quality
s10-Fit for purpose
s11-Goods description
s14-goods to match sample
s15-installation
CRA 2015: s9-Satisfactory quality
s10-Fit for purpose
s11-Goods description
s14-goods to match sample
s15-installation
What section limits exclusion clauses against these sections?
s31 CRA 2015
s57 CRA 2015 prohibits exclusion clauses on which sections?
s49-care and skill
s50-info about trader or service binding
s51-price
s52-time
CRA 2015: s49-care and skill
s50-info about trader or service binding
s51-price
s52-time
What section prohibits exclusion clauses on the above sections?
s57 CRA 2015
What section in CRA 2015 prohibits exclusion for death and personal injury resulting from negligence?
s65 CRA 2015
s65 CRA 2015
Prohibits exclusion for death and personal injury caused by negligence.
s62 CRA 2015
What does this provide?
All consumer contracts and notices to be ‘fair’.
Provides that all consumer terms and notices to be ‘fair’.
What act and section is this?
s62 CRA 2015
s11(5) UCTA 1977
Supporting case and facts
Warren v Truprint (1986)
Facts: D printed photographs and tried to reference a limitation clause in contract saying they were not liable for a couple’s silver wedding pics-could not justify exclusion clause.
Chapleton v Barry (1940)
Principle: receipts are not considered a valid form of notice for an exclusion clause.
Facts: man injured by deck chair was entitled to compensation despite an exclusion clause being stated on the receipt.
Principle: receipts are not considered a valid form of notice for an exclusion clause.
Chapleton v Barry (1940)
Facts: man injured by deck chair was entitled to compensation despite exclusion clause being stated on the receipt.
