Contract - Exemption Clauses Cases

Question 1

L’estrange v Graucob Ltd

Answer 1

Incorporation by signature

Exemption clause will be incorporated if:

• The clause is legible and signed by C; and
• the document is a contractual document.

Question 2

Curtis v Chemical Cleaning

Answer 2

Incorporation by signature - exception

If clause is misrepresented it will be invalid.

Question 3

Saunders v Anglia Building Society

Answer 3

Fraud makes the contract invalid.

Question 4

Chapelton v Barry Urban DC

Answer 4

Incorporation by notice

The document containing the clause must be contractual in nature.

Question 5

Parker v SE Railway

Answer 5

Incorporation by notice

There must be either:

• actual notice i.e. the innocent party must know of the clause; or
• constructive notice i.e. the party relying on the clause must have taken ‘reasonable steps’ to bring it to the other’s notice. Factors that determine whether steps were reasonable include:
• postion;
• prominence; and
• type of clause (rules for onerous clauses)

Question 6

Thornton v Shoe-Lane Parking

Answer 6

Incorporation by constructive notice - onerous clause

Onerous clauses must be explicitly drawn to the attention of the other party (red hand pointing to it in red ink).

Question 7

Interfoto v Stiletto

Answer 7

Incorporation by constructive notice - onerous clause

Onerous clause printed on foot of delivery note is not reasonable steps to bring it to the other’s attention.

Question 8

Olley v Marlborough

Answer 8

Incorporation by constructive notice.

The reasonable steps must occur before the contract is finalised.

Question 9

Thompson v London

Answer 9

Incorporation by constructive notice.

Reference to another document is okay.

Question 10

Spurling v Bradshaw

Answer 10

Incorporation through course of dealings

Course of dealings can provide notice after contract is finalised.

Question 11

Kendall v Lillico

Answer 11

Incorporation through course of dealings

Course of dealings must be consistent in both frequency and terms.

Question 12

Hollier v Rambler

Answer 12

Incorporation through course of dealings

3-4 times in 5 years is not frequent enough to achieve incorporation through course of dealings.

Question 13

McCutcheon v MacbBrayne

Answer 13

Incorporation through course of dealings

Scottish sunk ferry case - sporadic risk note signing.

If the contract is not consistent (i.e. sometimes signed, sometimes not), course of dealings is not consistent.

Question 14

Houghton v Trafalgar

Answer 14

Does clause cover breach? - contra proferentem rule

If the clause is ambiguous or unclear, the courts will interpret it against the party relying on it.

Question 15

Canada Steamship

Answer 15

Does clause cover breach? - exemption for negligence

Clause must clearly relate to negligence:

• expressly exempts liability for negligence; or
• contains wording wide enough to cover negligence, provided that, should it also cover other liabilities, the court doesn’t restrict cover to that liability.

Question 16

Photo Production v Securicor

Answer 16

Does clause cover breach? - very serious breaches

If clause is clearly worded, very serious breaches can be covered.

Question 17

Aisla Craig v Malvern Shipping

Answer 17

Rules for valid limitation clauses are more lenient than those for exclusion clauses.