Chapt 5: Exemption Clause

Question 1

What is an exemption clause?

Answer 1

It is an express term that exclude/limit liability of the party relying it.

Question 2

Who is the excludee and excluder?

Answer 2

Excluder: The one relying on the EC.
Excludee: The one being use against by EC.

Question 3

What the 4 factors that needs to be satisfy for EC to be Valid?

Answer 3

1. Incorporation of EC.
2. Construction of EC.
3. Unusual Factors.
4. Does UCTA intervene EC?

Question 4

What the 4 factors that needs to be satisfy for EC to be Valid?

Answer 4

1. Incorporation of EC.
2. Construction of EC.
3. Unusual Factors.
4. Does UCTA intervene EC?

Question 5

3 way of incorporating EC

Answer 5

1. By signature
2. By reasonably sufficient notice
3. By previous course of dealing

Question 6

Explain Incorporation of EC by signature:

Answer 6

Based on L’estrange V Graucob, it states that one is bound by all the terms in the contract once signed.

Even if they do not read it.

Question 7

Explain Incorporation of EC by reasonably sufficient notice.

Answer 7

When it comes to oral contracts or unsigned docs,

The notice must satisfy 2 conditions:

1. Contemporaneity
2. Sufficient

3 ways of how:

1. When notice was given?
2. Where was the notice located?
3. Was adequate notice given?

Question 8

3 ways of how EC is incorporated by reasonable Sufficient notice:

1. When notice was given?
2. Where was the notice located?
3. Was adequate notice given?

Answer 8

1. When notice was given?
   (It must be given before or at the time the contract is formed = EC valid)
2. Where notice was located?
   (Notice should locate at somewhere a reasonable man would find = EC valid)

Under sufficient:
3. Was adequate notice given?
(The notice need to be clearly visible, have made effort to bring attention to the notice = EC valid)

If excludee has disability?
Excluder don’t knows, took reasonable effort to bring attention to notice = EC valid

Excluder Knows, took no extra effort = EC invalid

Question 9

Explain Incorporation of EC by previous course of dealing:

Answer 9

If parties are often in the same dealings with the same EC. It is well-esthablished
(EC valid)

Question 10

Explain Construction of EC:

Answer 10

It looks at how it is constructed or interpreted.

Firstly, ask yourself whether EC applies to the breach/loss in question?

2 rules of construction:

1. Contra Proferentum Rule
2. Main Purpose Rule

Question 11

What about the 2 rules of construction:

Contra Proferentum Rule/Main Purpose Rule

Answer 11

1. Contra Proferentum Rule, see if there’s Ambiguity in interpreting the EC. If yes = EC would be construed against excluder. (Shoot yourself in the foot)
2. Main Purpose rule, See if EC exclude the main purpose of the contract. If yes, generally EC invalid. Unless, really construed in clear and unambiguous words, to exclude the breach that is root of the contract. EC will be valid.

Question 12

If EC attempts to exempt/limit liability for negligence?

Answer 12

EC must be construed with clear express of words exempting/limit negligence.

E.g. clearly use words such as “Negligence”.

if the word use can cover other liabilities other than Negligence. Focus on other liabilities.

Question 13

Explain unusual factors:

Answer 13

If there’s any unusual factors such as fraud or misrepresentation. If yes, it limits the EC effectiveness.

Question 14

Factors for EC to be valid,

Explain UCTA:

Answer 14

UCTA only applies to EC.
Draw the mindmap out.
3 steps:
State each of the statutes.

Question 15

What first schedule of UCTA states?

Answer 15

the contract falls within the scope of UCTA. Contracts that does not fall under is “Land”, “Securities”, “Insurance” or “IP”

Question 16

Section 1(3) of UCTA states:

Answer 16

When it comes to contract or tort section 2 to 7 only applies to “business liabilities” (B2B, B2C)

Question 17

S(2) of UCTA states:

Answer 17

Looks at EC that exempts negligence liability

Question 18

S2(1) and S2(2) of UCTA states:

Answer 18

S2(1): Breach of negligence results in death and injury, EC invalid.

S2(2): Breach of negligence results in damage or loss, EC is invalid. Unless EC is proven reasonable based on the reasonable test.

Question 19

S3 of UCTA relate to:

Answer 19

Contractual Liability

Question 20

S3(1) of UCTA states that:

Answer 20

The relevant sections only apply to contractual parties where one of them deals as a consumer or deals with other’s written standard terms of business.

Question 21

S12 of UCTA states:

Answer 21

It defines what’s a consumer transaction.

Question 22

S3(2) of UCTA states:

Answer 22

Parties cannot be excluded/exempted from breach of their contractual liability, unless proven to be reasonable through reasonable test.

Question 23

S11 of UCTA sets out what?

Answer 23

It sets out the reasonable test for EC.

Question 24

S11(1) of UCTA states:

Answer 24

EC would be fair and reasonable if we take into consideration of the circumstances that were/ought reasonably to have been or in contemplation of the parties AT THE POINT WHEN CONTRACT IS MADE.

Question 25

S11(2) of UCTA states:

Answer 25

The second schedule factors is only apply to Section 6 and 7, however the court held that we can use it for S2 and S3 as well.

Question 26

5 Factors in 2nd Schedule:

Answer 26

1. Strenght of bargaining position
2. Customer receives inducement to accept EC.
3. Whether the customer knows about EC.
4. Compliance with a condition
5. whether goods are specifically Ordered.

Question 27

2nd schedule factor: strength of the bargaining position

Answer 27

Bargaining strength of both parties are equal = EC reasonable

Excluder have more bargaining position than excludee = EC unreasonable.

Question 28

2nd schedule factor: Customer receives inducement to accept EC

Answer 28

If Yes, EC reasonable.

If not, EC not reasonable

Question 29

2nd schedule factor: Whether Customer knows about EC

Answer 29

If yes, EC reasonable.

Question 30

2nd schedule factor: EC compliance with a condition

Answer 30

If practicable = EC reasonable.

Question 31

2nd schedule factor: Is the good specifically ordered?

Answer 31

Yes = EC reasonable.