Contract Terms and Exemptions

Question 1

Hutton v Warren [1836]

Answer 1

Terms will be implied by courts into a contract based on local custom or trade usage

Question 2

Spurling v Bradshaw [1956]

Answer 2

Terms will be implied by courts based on previous course of dealings between parties, exemption clauses may be validly incorporated by course of dealings

Question 3

Shirlow v Southern Foundris Ltd

Answer 3

A term can only be implied if point so obvious that it went without saying that that was what the parties intended. If a bystander suggested a term to include and both parties responded of course then the test was satisfied

Question 4

AG of Belize v Belize Telecom Ltd [2009]

Answer 4

The business efficacy and officious bystander tests still hold, but the court’s duty is simply to establish what the contract would mean to a reasonable person having the relevant background information

Question 5

Liverpool CC v Irwin [1977]

Answer 5

Where the contract is of a kind which frequently occurs, the courts may identify provisions which are typical of that kind of contract and say that these provisions will be implied terms unless the parties make contrarty provisions

Question 6

L’Estrange v Graucob [1934]

Answer 6

If the clause is in a contractual document and it is legible, it will be incorporated as long as the document was signed by the innocent party

Question 7

Curtis v Chemical Cleaning & Dyeing Co [1951]

Answer 7

An exemption clause will be invalid if the effect of the clause has been described inaccurately and the innocent party has reasonably relied on the inaccurate description in entering the contract

Question 8

Beale v Taylor

Answer 8

s.13 SGA - may still apply where the goods have been inspected

Question 9

Chapelton v Barry UDC [1940]

Answer 9

The document containing the clause must be contractual in nature

Question 10

Parker v South Eastern Railway [1877]

Answer 10

Unnecessary for the innocent party to be aware of the clause if reasonable steps have been taken by the other party to inform them. Factors in consideration are: clause position in the document, prominence of the clause and the type and nature of the clause

Question 11

Thornton v Shoe-Lane Parking ltd [1971]

Answer 11

Onerous clauses must be explicitly drawn to the attention of the other party

Question 12

Interfoto v Stiletto [1989]

Answer 12

Onerous clause printed on the foot of the delivery note does not amount to reasonable steps to bring it to their attention

Question 13

Kendall v Lillico [1969]

Answer 13

3-4 times per month over 3 years amounted to course of dealings

Question 14

Hollier v Rambler Motors [1972]

Answer 14

3-4 times in 5 years did not amount to course of dealings

Question 15

Olley v Marlborough Court Ltd

Answer 15

Reasonable steps must be taken before the contract is finalised for the exemption clause to be incorporated

Question 16

McCutcheon v MacBrayne Ltd [1964]

Answer 16

The exemption clause has to be consistently included to be relied upon

Question 17

Houghton v Trafalgar Insurance [1954]

Answer 17

Contra Proferentem Rule - Clause is ambiguous or unclear the courts will interpret againt the party relying on it

Question 18

Canada Steamship Lines v R [1952]

Answer 18

Exemption clause for negligence must be clearly worded - it must clearly relate to negligence, expressly exempting or contain words that are wide enough to exclude liablitiy for negligence, provided the wording only covers negligence

Question 19

Photo Productions Ltd v Securicor Transport Ltd [1980]

Answer 19

An exemption clause can cover very serious breaches as long as it is clearly worded

Question 20

Smith v Eric Bush [1990]

Answer 20

Whether an exemption clause is reasonable will depend on whether the parties are of equal bargaining power, reasonable for the advice to be obtained elsewhere, task difficulty and the practical consequences in terms of insurance

Question 21

St Albans City and District Council v International Computers [1995]

Answer 21

Reasonableness of limitation clauses:
Experienced commercial bodies free to make their own bargain
Awareness of the limitation clause at the time if the contract
Defendant have ample resources
Amount of limitation clause reasonable

Question 22

Schenkers v Overland Shoes

Answer 22

Standard industry terms are generally reasonable

Question 23

Watford Electronics v Sanderson [2001]

Answer 23

Exemption clause can be split into its various parts if it serves a distinct purpose, reasonableness of each part is assessed separately

Question 24

Stewart Gill v Horatio Myer [1992]

Answer 24

Clause as a whole should be considered and not only the part relied on, reasonableness assessed on when the contract was made not the time of the breach