Construction of Exemption Clauses Flashcards
What is an exemption clause
a contractual term that purports to limit or exclude a liability that would otherwise attach to one of the contracting parties.
what 3 things do you need to consider whether a party can rely on an exemption clause?
1) Incorporation
- Is exemption clause part of the contract?
2) Construction
- Does the clause, as drafted, cover the alleged breach(es) + resulting loss?
3) Statutory Controls
- What is the effect on the clause of the Unfair Contract Terms Act 1977 + the Consumer Rights Act 2015?
What will exclusion clauses usually relate to?
1) whether L is entirely excl/ ltd to stated amount
2) types of claim/ duties exemption relates to
3) types of loss exemption relates to
What is the general rule on how exemption clauses are construed?
They are construed contra proferentem - if any doubt as to meaning + scope = ambiguity resolved against party (known as the ‘proferens’) seeking to rely upon it.
Do courts apply the contra proferentem rule with less rigour where the clause in question merely limits rather than excludes liability?
Yes
If a party is seeking to exclude liability resulting from its own negligence, the exemption clause must use…
clear words + avoid ambiguity, especially with the word ‘negligence’ - Using it or a close synonym for negligence.
If general words are used, their effectiveness may depend on what 2 distinctions?
1) cases where the only basis for liability is negligence
2) cases where the party will be liable irrespective of negligence
Will an exemption clause protect a person not party to the contract?
No - only protects the party its for.
in what circumstances may the contra proferentum rule and the Canada Steamship rules be less relevant?
when an exemption clause occurs in a commercial contract between parties of equal bargaining power
