Chapter 3: Exclusion Clauses Flashcards
What is an exclusion clause?
Terms that are included in written contracts in an attempt to exclude or limit liability for a breach of contract.
How will an exclusion clause be interpreted?
Any exclusion clause will be interpreted strictly against the party seeking to rely on it.
What are the two tests that an exclusion clause must pass in order for it to be valid?
Common law tests and The statutory rules
What are the two common law tests?
Incorporation and Interpretation
In what two ways can an exclusion clause be incorporated by?
Signature & Notice
What is meant by incorporation by signature?
If the claimant signed a document containing the clause, then they will be bound by the clause.
This rule applies even if they have not read the document.
As long as the other parties do not misrepresent what the clause covers.
What is meant by incorporation by notice?
If the defendant takes reasonable steps to bring the clause to the claimant’s attention, then the clause will be held to have been incorporated. This must have happened at the time of the agreement or before.
Olley v Marlborough Court (1949)
Facts of ‘Olley v Marlborough Court (1949)’
Mr Olley and his wife booked a hotel room.
When they got to the room there was a notice denying liability for loss or damages to personal belongings.
Held in ‘Olley v Marlborough Court (1949)’
The clause was not incorporated as it was brought to the party’s attention after the agreement was entered into.
What is meant by interpretation of an exclusion clause?
The defendant will only be able to rely on an exclusion clause if it covers the loss the claimant has suffered.
In case of any ambiguity, the clause will be interpreted against the person trying to rely on it.
What are the statutory rules that an exception clause must pass?
The Unfair Contract Terms Act (1977)
The Consumer Rights Act (2015)
When does the Unfair Contract Terms Act (1977) apply?
To exclusion contracts made in the course of a business.
What does the UCTA state with regards to a clause exempting liability?
If it is for death or personal injury due to negligence then the exemption clause is void.
If it is for other loss due to negligence then the exemption clause in void unless reasonable.
What does the Consumer Rights Act (2015) state?
The terms in contracts between a consumer and a business must be ‘fair’.
What factors would be considered to determine if the clause was fair?
Is the clause automatically unenforceable?
Does the clause put the consumer at a disadvantage?
What is the nature of the contract itself?
Is the clause stated in plain, intelligible language?
Are any relevant terms prominent?
