4. Exemption Clauses

Question 1

L’Estrange v Graucob

Answer 1

Party bound by signature, even if he hasn’t read doc

Question 2

Curtis v Cleaning

Answer 2

Party maybe prevented from relying on incorporation through signature of doc if he has already misrepresented meaning of clause to other party

Question 3

Grogan v Robert Meredith

Answer 3

Signature will not incorporate exemption clause if doc signed doesn’t have contractual effect

Question 4

Parker v SE Railway

Answer 4

Cloakroom ticket which on front says ‘see back’ and on back excludes liability for loss of item worth more than £10 amounts to valid exemption

Question 5

Thompson v LMS Railway

Answer 5

Similar facts, but on reverse instead of containing exclusion, state ticket issued subject to standard conditions set out in railway timetable

Still held to be valid

Question 6

Harvey v Ventilatorenfabrik

Answer 6

Contract written in German and exclusion clause inserted without other party’s knowledge

Not valid

Question 7

Henderson v Stevenson

Answer 7

Where doc does not have clear words on face of it directing attention to exemption clause on the reverse, it is unlikely that such a clause will be incorporated

Question 8

Sugar v LMS Railway

Answer 8

If there are clauses that had been rendered illegible, e.g. by a date stamp, it is unlikely that they will be deemed incorporated

Question 9

Interfoto v Stiletto

Answer 9

Onerous term will not be incorporated into contract merely by being included in the standard printed contract

Question 10

Spurling v Bradshaw

Answer 10

Terms that are particularly onerous should be drawn to attention of other party by special note or by printing them in red ink

Question 11

McCutcheon v MacBrayne

Answer 11

Course of dealing must have been consistent over period of time

Question 12

Hollier v Rambler

Answer 12

3-4 transactions over 5 years insufficient

Question 13

Kendall v Lillico

Answer 13

3-4 times per month over 3 years sufficient

Question 14

Olley v Marlborough Hotel

Answer 14

Reasonable notice of exemption clause must be given before or at time of contracting

Question 15

Thornton v Shoe Lane Parking

Answer 15

Reasonable notice of exemption clause written on back of ticket issued by machine not given before or at time of contracting

Question 16

Chapleton v Barry UDC

Answer 16

Exemption clause is not incorporated into contract if doc in which it is contained is not one that could reasonably be expected to have contractual force

Question 17

Andrews Brothers v Singer

Answer 17

Contra proferentem rule

Question 18

Alisa CraigFishing v Malvern Fishing

Answer 18

Contra proferentem rule applied with less rigour when clause merely limits rather than excludes liability

Question 19

Canada Steamship v R

Answer 19

1. Does the clause expressly mention negligence (or a close synonym - Monarch Airlines v London Luton Airport)
2. Are the words used wide enough?
3. Are the words used too wide?

Question 20

UCTA 1977, s 1(3)

Answer 20

Applies only to business liability

Question 21

UCTA 1977, s 2(1)

Answer 21

Liability for personal injury/death arising from negligence cannot be excluded

Question 22

UCTA 1977, S 2(2)

Answer 22

Loss/damage arising from negligence can only be excluded if it satisfies the requirements of reasonableness

Question 23

UCTA 1977, s 11(1)

Answer 23

Requirement is that term should be fair and reasonable one, having regard to circumstances which were, or ought reasonably to have been, known to the parties when the contract was made

Question 24

UCTA 1977, s 11(5)

Answer 24

Burden of proving reasonableness lies with party claiming that contract or notice satisfies the requirement of reasonableness

Question 25

UCTA 1977, Sch 2

Answer 25

Guidelines for assessing reasonableness
Strength of parties’ bargaining positions
Whether customer knew, or ought reasonably to have known, of existence of term
Etc.

Question 26

George Mitchell v Finney Lock Seeds

Answer 26

Significant degree of judicial discretion in establishing reasonableness

Question 27

UCTA 1977, s 6(1)

Answer 27

Liability for seller’s implied undertakings as to title cannot be excluded

Question 28

UCTA 1977, S 6(2)

Answer 28

Liability for breach of obligations arising from SGA 1979, ss 13, 14 and 15 cannot be excluded against person dealing as a consumer

Question 29

UCTA 1977, S 6(3)

Answer 29

For non-consumers, these obligations can be excluded where term satisfies the requirement of reasonableness

Question 30

UCTA 1977, S 12(1)

Answer 30

Person deals as consumer when

(a) he doesn’t contract in course of business
(b) other party does make contract in course of business
(c) goods are of type ordinarily supplied for private use/consumption

Question 31

UCTA 1977, S 3(2)

Answer 31

Not possible to exclude/restrict liability for breach of contract

Question 32

Reg 4(1)

Answer 32

Regulations apply to unfair terms in contracts concluded between seller/supplier and consumer

Question 33

Reg 5(1)

Answer 33

Regulations apply only to terms that have not been individually negotiated

Term is unfair if, contrary to requirements of good faith, it causes significant imbalance in parties’ rights and obligations arising under contract, to detriment of consumer

Question 34

Sch 2

Answer 34

Provides non-exhaustive list of unfair terms

E.g. Requiring any consumer who fails to fulfil obligations to pay disproportionately high sum in compensation

Question 35

DG of Fair Trading v First National Bank

Answer 35

Requirement of good faith is one of fair and open dealing

Terms should be expressed fully, clearly and legibly
Seller/supplier should not take advantage of consumer’s necessity, indigence, inexperience, weak bargaining position

Imbalance is where term is weighed in favour of supplier such as to tilt parties’ rights and obligations

Question 36

Reg 6(2)

Answer 36

Requirement of fairness shall not relate to

(a) definition of main subject matter of contract
(b) adequacy of price or remuneration

Question 37

Office of Fair Trading v Abbey National

Answer 37

Charges levied by banks for overdrawn accounts are held to be part of price/remuneration for banking services provided and thus no assessment of the fairness of those times may be applied

Question 38

Reg 7(1)

Answer 38

Written term must be expressed in plain, intelligible language

Question 39

Reg 7(2)

Answer 39

In case of ambiguity, interpretation most favourable to consumer shall prevail

Question 40

Reg 8(1)

Answer 40

If term is unfair, it shall not be binding on consumer