Contract 2.2: Exclusion Clauses Flashcards
What are the requirements for an exclusion clause to be effective?
- Must be incorporated
- signature
- notice
- custom/previous dealing - Must be construed
- wording must cover loss suffered - Must not be prohibited
- death or PI caused by negligence
- title to goods sold
- some may be subject to UCTA
How can an exclusion clause be incorporated (general)?
- by signature
- by notice
- through custom or previous dealing
How is an exclusion clause incorporated by signature and when not?
- Doc contractual in nature
- C signs it
- Does not matter if C did not read or undersant it
Defences:
1. Misrepresentation
2. Non est factum
3. exemption clause illegible
4. clause is unusual and onerous
How is an exclusion clause incorporated by notice?
- Doc contractual in nature
- Notice before contract was concluded
- Timing and reasonable steps
How can an exclusion clause be incorporated by custom or previous dealing?
- Industry custom may be enough to incorporate term
-Party attempting to rely on previous dealing must show regular and consistent course of dealing (at least more than 4 deals over 5 year period)
How must an exclusion clause be constructed?
- Wording must be clear and unambiguous and cover the loss suffered
- Any ambiguity will be interpreted against the party seeking to rely on exclusion clause (Contra Proferentem Rule)
What exclusion clauses are automatically void under UCTA?
- Applies only to B2B contracts
- Death and PI by negligence
- For breach of implied condition as to title under Sale of Goods Act
What exclusion clauses are subject to UCTA reasonable test?
Any clause that excludes liability:
- For loss (other than death) caused by negligence
- For breach of obligations as to compliance with description, quality or fitness for purpose
If one party contracts on its standard form terms and conditions, any clause:
- That excludes or restricts liability for breach of contract
- reserves the right to renter contractual performance substantially different from what was expected
- to render no contractual performance at all
What is the difference if a party tries to limit liability rather than exclude it?
More likely to be found reasonable
What is the reasonableness test under UCTA?
Requires that term is:
- fair and reasonable one to be included
- having regard to the circumstances which were, or ought reasonably to have been, known to or in contemplation of the parties
- when the contract was made
What might courts consider if deciding if term is reasonable under UCTA?
- Strength of bargaining position of parties
- Inducement to accept exemption or alternative options
- if customer knew or ought to have reasonably known about the existence and extent of their term in question (custom, course of dealing etc.)
- if term excludes or restricts liability if condition was not complied with, was it reasonable that compliance with such a condition was practicable
- If goods were manufactured or adapted to the special order of the customer (more reasonable)
Who has the burden of proof in regard to the reasonableness of a term under UCTA?
- Party seeking to rely on clause must prove that it is reasonable
- Test is if it was reasonable to include clauses in contract
What does UCTA and CRA govern in relation to exclusion clauses?
UCTA
- b2b contracts
CRA
- contracts between traders (business) and consumers
What are prohibited exclusions clauses under CRA?
Cannot exclude or limit implied term
- to title of goods
- compliance with description
- quality or fitness for purpose
- that services are carried out with reasonable care and skill
- services are carried out are carried out in reasonable time (if not agreed)
Cannot exclude
- liability for death or personal injury due to negligence
When is a term ‘unfair’ under CRA?
- is not related to main subject matter or price of contract
- is not transparent (eg in plain and intelligible language and legible)
- if it is contrary to good faith or causes significant imbalance in parties rights and obligations to detriment of consumer
