Contract Law - Terms of Contract, Exemption Clauses & Vitiating Factors

Question 1

Exemption/Exclusion Clause

Answer 1

clauses to exclude party who inserted clause from certain liabilities

Question 2

Signed Documents

Exemption Clause

Answer 2

• signing party is bound
• does not matter if they have read it

Question 3

L’Estrange v Graucob

Signed Document

Answer 3

Claimant purchased cigarette vending machine and signed order form with exemption clause. Vending machine did not work, and claimant sued for the product not being of merchantable quality.

Held: she was bound to all terms in the contract that she signed, regardless of if she read it or not - unsuccessful claim

Question 4

Unsigned Documents are Still Express Terms if:

Answer 4

• sufficient/reasonable notice is given - eg. highlight, fonts, colours
• EC given before/at time of contracting
• previous dealings - parties have had previous dealings (course of dealings)
• contra proferentum rule - clear & wide terms = effective, ambiguous, vague & unclear terms = ineffective

Question 5

Parker v Sth. Eastern Railway Co

Sufficient Notice Given

Answer 5

Plaintiff deposited bag in cloakroom. He recieved ticket which said ‘see back.’ The back of the ticket contained clauses limiting liability for loss to $10. Bag was lost & plaintiff tried to claim for $240.

Held: plaintiff is bound by clause although he did not read it - defendants had done what was reasonably sufficient for notice

Question 6

Olley v Marlborough Court

Timing of Exemption Clause

Answer 6

Hotel had belated notice in room stating exclusion from responsibility of valuables not given to proprietor for safe keeping. Contract was formed at reception desk.

Held: hotel cannot rely on belated notice, plaintiff did not know of EC at the time of contracting

Question 7

Hollier v Rambler Motors Ltd

Previous Dealings, Contra Proferentum Rule

Answer 7

Plaintiff had his car repaired at the garage 3-4 times over 5 years. On 2 occasions, he signed form with EC (exemption from liability of damage by fire). On this occasion, he did not sign any form (oral agreement). Car was damaged by fire, and he claimed.

Held: 3-4 times in 5 years is not sufficient for a course of dealings, EC is ambiguous - defendants are liable