Contract - Exemption Clauses Flashcards
What three ways can an exemption clause be incorporated into a contract?
1- Signature
2- Notice
3- Course of dealings
What conditions must be satisfied for a clause incorporated by signature to be valid? (+ authority)
L’estrange v Graucob:
1- The document is a contractual document
2- Clause is legible and signed
What conditions must be satisfied for a clause incorporated by notice to be valid?
1- The document is contractual in nature
2- There must be actual or constructive notice of the clause
For notice to be constructive, the party relying on the clause must have taken ‘reasonable steps’ to draw it to the others attention
Parker v South Eastern Railway
What factors will suggest reasonable steps were taken to give notice of an exemption clause?
Parker v South Eastern Railway:
1- Position
2- Prominence
3- type of clause (if onerous, extra attention required)
Onerous clauses must be explicitly drawn to the attention of the other party (red hand pointing in red ink)
Thornton v Shoe Lane Parking
Reasonable steps to incorporate the term must occur before the contract is finalised or at the time of finalisation
Olley v Marlborough Court
Three to four times per month amounted to a course of dealings
Kendall v Lillico
Three to four times in 5 years was not a course of dealings
Hollier v Rambler Motors
If contracts are sometimes signed and sometimes not there isn’t sufficient consistency for there to be a course of dealings
McCutcheon v MacBrayne
If the clause is ambiguous or unclear, the court will interpret it against the party relying on it. What is this doctrine known as?
Contra Proferentem Rule (Houghton v Trafalgar Insurance)
The exemption clause must be clearly worded to exclude a very serious breach
Photo Productions v Securicor Transport
What is the effect of UCTA if it applies to a clause?
Renders the clause void; or
Subjects it to the reasonableness test
What case law should be considered when deciding if an exclusion clause is reasonable?
Smith v Eric Bush
What should be considered when looking at clauses excluding liability for advice?
Smith v Eric Bush: 1- ADVICE could be obtained elsewhere 2- BARGAINING powers of parties equal 3- CONSEQUESNCES? 4- DIFFICULTY of the task
Which case should be considered when looking at the reasonableness of limitation clauses?
St Albans v International Computers
What should be considered when looking at the reasonableness of limitation clauses?
St Albans v International Computers 1- Resources to cover liability? 2- Insurance to liability ratio 3- Common in industry? 4- Experienced commercial bodies? 5- Aware of limitation clause?
General Rule: Exemption clauses cannot protect third parties due to privity of contract rules
Himalaya Case (Adler v Dickson)
What should be considered if the clause is trying to protect a third party?
Contracts (Rights of Third Parties) Act 1999
What is the effect of termination?
Stops obligation to perform future contractual duties
Allows for the recovery of money paid
Requires goods to be returned
Allows for the affected party to sue for damages
What is the effect of affirmation
Party can keep the goods
And sue for damages
When is the right to terminate lost under the SGA?
If the breach is so slight it would be unreasonable to reject the goods (s.15A)
The buyer has retained the goods ‘beyond a reasonable time’, thereby accepting them (s11(4))
Quotations are documents of a contractual nature
Chapelton v Barry
What does s6 UCTA apply to?
Breach of SGA
