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Question 1

What is an exclusion clause?

Answer 1

Terms that attempt to exclude or limit liability for a breach of contract.

Question 2

What 3 things make an exclusion clause valid?

Answer 2

• Term must be incorporated by signature, notice or course of previous dealings.
• Term must cover the loss being exempted or limited
• Term must not contravene statute (law)

Question 3

How do signatures work for exclusion clauses?

Answer 3

• A person is bound by what they sign even if they don’t understand
• Signature isn’t valid if obtained by fraud/misrepresentation
• Signature must be done before commencement of the contract

Question 4

How do notices work for exclusion clauses?

Answer 4

• They’re the signs/notices that contains exclusion clauses
• Reasonable steps must taken to notify the other party before contract - therefore doesn’t matter if other party doesn’t understand

Question 5

What’s an example of notices in exclusion clauses?

Answer 5

Thornton V Shoe Lane Parking (1971) - Notice inside car park

Question 6

How do course of previous dealings work in exclusion clauses?

Answer 6

Has to be incorporated
- Used in similar transactions
- Must be frequent/consistent dealings

Question 7

What’s two examples for course of previous dealings?

Answer 7

• Spurling V Brads (1956) - Identical transactions over several years - sufficient

Hollier v Rambler Motors (1972) – 3 or 4 transactions over a 5 year period = insufficient

Question 8

What does it mean when the “term must cover the loss being exempted”?

Answer 8

To provide protection to injured parties, courts interpret exclusion clause strictly - must be very specific.

Question 9

Name an example of a specific exclusion clause

Answer 9

Photo Productions Ltd v Securicor (1980) – wording was VERY detailed to include no liability for fire damage

Question 10

What does it mean when the term must not contravene statute?

Answer 10

It must satisfy:

• Unfair Contract Terms Act (UCTA) (1977)
• Consumer Rights Act (CRA) (2015)

Question 11

What’s Unfair Contract Terms Act (UCTA) (1977) ?

Answer 11

Only applies B2B.

Makes exclusion clauses valid based on whether or not they’re reasonable.

Question 12

Name 2 things that would make an exclusion clause valid

Answer 12

• Excludes death/personal injury from negligence
• Excludes manufacturer’s liability for losses or injury due to defective goods
• Excludes the terms implied by the CRA 2015

Question 13

What’s the requirement for reasonableness for UCTA?

Answer 13

• The bargaining positions of the parties
• Whether any inducement was received to accept the term
• The ability of the party to insure against the liability

Question 14

What’s the Consumer Rights Act (CRA) (2015) ?

Answer 14

Provides statutory control in respect of consumer contracts and consumer notices (e.g. signs in a car park).

Terms between a business and consumer are only binding on the consumer if they are fair.

Question 15

What terms are automatically unenforceable in CRA?

Answer 15

Limiting liability for death or personal injury.

Question 16

What happens when a term isn’t deemed automatically?

Answer 16

The CRA Act requires the term to pass a reasonableness test.

Question 17

When is a term unfair?

Answer 17

• Puts consumer at disadvantage
• Not written in plain, intelligible English
• Contrary to good faith causes a significant imbalance in the parties’ rights and obligations under the contract and this proves to the detriment of the consumer.

Question 18

What happens when a contractual term is open to different meanings?

Answer 18

The most favourable is given to consumers in order to prevent unfair exploitation of customers.

Question 19

What’s a breach of contract/

Answer 19

Where one party to the contract fails to perform wholly or substantially their obligations under the contract.

A breach of contract terminates the agreement, and may give rise to the injured party suing for damages or other remedy

Question 20

Name 2 types of contract breaches?

Answer 20

• Actual breach
• Anticipatory breach

Question 21

What’s an actual breach?

Answer 21

Occurs on the due date of performance.

Parcel was supposed to come on Monday but it comes on Wednesday.

Question 22

What’s an anticipatory breach?

Answer 22

Before due date of performance, party makes it clear it won’t be able to.

Parcel couriers contact you on Friday that parcel won’t arrive until Wednesday

Question 23

What’re the 2 options for anticipatory breach?

Answer 23

• Treat contract as over + sue for damages without waiting for due date of performance
• Treat contract as still valid + perform their side of the contract and wait for the actual breach and sue for payment from the other party.

Question 24

Name 2 remedies the innocent party to a breached contract is entitled to

Answer 24

• Damages
• Specific performance
• Quantum Meruit Payment
• Injunction
• Rescission

Question 25

What're damages?

Answer 25

Monetary compensation for loss suffered and/or benefits which would have accrued from contract. Losses must not be too remote from the breach.

Question 26

How are damages measured?

Answer 26

The award of damages is compensatory. It seeks to put the innocent party in the position he would have been in if the breach had not occurred. This is often called the “loss of bargain” principle E.g. A agrees to buy a TV from B for £100. B sells to someone else = breach. A purchased a similar TV for £120 from C. A’s damages are £20 i.e. the loss suffered on the bargain. If A found the TV elsewhere for £80, then no loss would be suffered – in fact they are better off!

Question 27

What're liquidated damages?

Answer 27

Parties may stipulate the amount of damages payable to them upon breach. This is known as liquidated damages E.g. late payment fines This amount may be recovered if it is a reasonable assessment of loss suffered.

Question 28

What is mitigation of loss?

Answer 28

The innocent party in a contract is required to mitigate his losses.

Question 29

When can damages for non-financial losses be recovered?

Answer 29

If the contract is designed to give pleasure or enjoyment. Jarvis v Swans Tours (1973) – cancelled holiday

Question 30

What is Quantum Meruit Payment?

Answer 30

The phrase means for as much as he deserves. This is a proportional payment for performance already carried out under a contract. It applies: Where complete performance was prevented by act of the other party. Where amount payable on the contract was not stipulated by the parties.

Question 31

What's specific performance?

Answer 31

This is an equitable remedy. This is an order to the defendant to perform the contract as agreed. Usually awarded where the subject matter of the contract is special, unique or scarce.

Question 32

What's injunction?

Answer 32

This is another equitable remedy. This is usually prohibitive, though it may be mandatory in some cases. A prohibitive injunction is an order not to do anything contrary to the contract; it is used to ensure compliance with a negative obligation in a contract

Question 33

What's Rescission?

Answer 33

This is another equitable remedy. The contract is set aside and treated as though it had never existed. The court will seek to restore the parties to the position they would have been in had they never entered the contract.