Contract Law: Exclusion clauses

Question 1

What are exclusion clauses?

Answer 1

A term in a contract that excludes or limits liability for a breach of the contract or loss.

Question 2

What are terms and conditions?

Answer 2

Set out the rights and responsibilities of the provider of the service and the service user.

Question 3

How are contracts interpreted?

Answer 3

There has been a move away form the literal approach to the purposive approach.

Question 4

What are the 3 matters to consider by a court when there is an exclusion clause in a contract?

Answer 4

• Whether the agreement is signed as shown in L’estrange v Graucob 1934
• Whether any notice with the term in it is incorporated into the contract by reasonable notice.
• Whether the term is incorporated as a result of the previous dealings of the parties, as shown in Hollier v Rumbler Motor 1972

Question 5

What is the contra proferentem rule?

Answer 5

• Designed to assist in the misinterpretation of the meaning of a term, the words can be construed against the person who put them in the contract.
• As shown in Transocean Drilling UK Ltd v Providence Resources PLC 2016.

Question 6

Describe statutory control of exclusion clauses.

Answer 6

Where an exclusion clause is incorporated as part of a contract there are statutory provisions that may make the clause invalid
- The Unfair Terms Act 1977 applies to exclusion clauses for liability in tort as well as contractual breaches.
- Consumer Rights Act 2015 applies to contracts between traders and consumers

Question 7

What are the exclusions and limitations made void by the Unfair Contract Terms Act 1977?

Answer 7

• S2- a person cannot exclude injury caused by negligence.
• S6- the implied condition cannot be excluded.
• S11- the clause must be reasonable in all circumstances as shown in Warren v Truprint LTD 1986

Question 8

What are the 3 tests of reasonableness under the Unfair Contract Terms Act 1977

Answer 8

1) S11 (1)- Whether the insertion of the term in the contract is reasonable in the light that was known to the parties at the time the contract was made as shown by Smith v Eric S Bush 1990.
2) S11 (2)- covers the exclusion clauses involving breaches of the implied conditions in the Sales of Goods Act 1979 and Supply of Services Act 1982 in business to business dealings as shown in Watford Electronics Ltd v Sanderson CFL Ltd 2001.
3) S11 (4) there are 2 criteria:
- the resources which the df could expect to be available for meeting their liability, should it arise.
- how far it was open to the defendants to cover themselves by insurance against any successful claim.

Question 9

What are the 3 main sections of the act which set out the bars on exclusion clauses

Answer 9

• S31 prohibits a term excluding or limiting liability for S9, 10, 11, 14, 15.
• S57 prohibits a term excluding or limiting liability for the supply of services under S49, 50, 51, 53.
• S65 prohibits exclusion or restriction of liability for death or personal injury resulting from negligence.