6 - Contract terms - Exclusion clauses Flashcards
exclusion clauses
may be inserted into a contract in order to reduce or eliminate the liability of either party where certain events may occur.
Business will generally operate on standard from contract
Common Law control of exclusion clauses
Where one party to the contract is more dominant and seeks to rely on an exclusion clause (which will have negative effect on the other party). The court have created 2 rules which indicate whether to accept the clause or deny it
* The clause must be incorporated into the contract and
* The clause will be constructed by the courts and must protect the party from damage caused and not seek to gain an undue advantage from it
Incorporation of the exclusion clause
done through the contract, which has been signed or the other party has knowledge of the clause
Where parties have signed then caveat emptor applies – you agree to what you sign for
Where the contract isn’t signed but the clause should have been brought to the attention of the other party ie through a sign or documentation given to them, the exclusion clause will only be binding if the parties had express knowledge of the clause at the time
rules governing knowlegde of the exclusion clause
Did the party have knowledge of the clause – they may have done business together before
Were reasonable steps taken to bring the exclusion clause to the attention of the party
Olley v Marlborough Court Hotel 1949
O booked into M’s hotel. A sign in the room said possessions were left at the owner risk. O left a fur coat which was stole. Held that the exclusion clause (the sign) should have been made clear in the contract at the reception desk. It was too late by the time they got to the hotel room for the term to be part of the contract.
Construction of the Clause
The exclusion clause must be interpreted, or constructed by the courts to see if it will achieve what it is meant to do without unduly penalising the other party
The main rule is: contra proferentem rule: any ambiguity with regard to the clause must be interpreted against the party proposing the clause
Hollier v Rambler Motors 1972
C’s car was damaged in a fire a D’s garage. On previous occasions the standard from contained an exclusion clause excluding liability for fire damage. On this occasion the standard from hadn’t been signed
C of A – held that the standard form was not incorporated into the contract simply because they had previous dealings.
For an exclusion clause to be valid very clear wording must be used
Unfair Contract Terms Act 1977
Was introduced to give consumers great protections
It distinguishes between a consumer contract and one between businesses
Void exclusion clauses
S2(1) – a party cannot rely on an exclusion clause that tries to exclude or restrict their liability for death or personal injury from negligence
Valid if reasonable
S2(2) – in the case of loss or damage a person cannot exclude or restrict their liability except when the term notice satisfies the requirement for reasonableness
Valid if reasonable
s3 – where a consumer deals on a business’ standard form of contract the business cannot exclude its liability for breach unless its actions satisfy the requirement of reasonableness
Reasonableness – the term should be fair and reasonable and have regard to the circumstances which were, or ought reasonable to have been known byt the parties when the contract was made
statutre control over exclusion causes
unfair contract terms act 1977
consumer righst act 2015
s31
consumer righst act
iability that cannot be excluded or restricted (goods)
A term of contract under s9,10 and 11 to supply good cannot be excluded or restricted by a trader
s57
consumer rights act
liability that cannot be excluded or restricted (services)
A term of contract under s49 to supply services cannot be excluded or restricted by a trader
s65
consumer rights act
– the bar on exclusion or restriction of negligence liability
Traders cannot rely on terms in a consumer contract or notice which excludes or restricts liability for death or personal injury
