Contract terms-Exclusion clauses Flashcards
What is an exclusion clause?
Excludes one of the parties from liability if a certain element of the contract is breached
What is a limitation clause?
Reduces one of the parties level of liability if a certain element of the contract is breached.
Courts accept exclusion clauses but what do they try to seek to ensure?
That the less powerful party is not taken advantage of by the more powerful party.
Example case for an exclusion clause.
L’Estrange and Graucob (1934)
Facts of L’Estrange and Graucob (1934).
C purchased cigarette vending machine for her cafe.
Signed an order form which included a general exclusion clause in the small print.
EC said machine did not work.
Could not claim compensation, whether she had read the full terms or not.
Rule for exclusion clauses which come from common law.
- Main purpose rule
- Incorporation
- Overriding oral statement
- Third parties
- Construction - the contra proferentem rule
What is the main purpose rule?
Courts may not accept it as a valid exclusion clause if it affects the “main purpose” of the contract
Case for main purpose rule.
London and North Western Railway v Neilson (1922)
3 ways an exclusion clause can be incorporated into the contract.
- Signature
- Notice
- Previous course of dealing
Case for a signature meaning an exclusion clause is incorporated in a contract even if the contract is not read.
L’Estrange and Graucob (1934)
What is a sufficient notice in regards to incorporating an exclusion clause?
The other party must be made aware of the exclusion clause before they enter the contract.
Case for sufficient notice being given for incorporation of a contract.
Chapelton v Barry urban District Council (1940)
Facts of Chapelton.
C paid to sit on a council deck chair, after which he was given a receipt on the reverse of which was an exclusion clause.
Exclusion clause was invalid.
What is meant by previous course of dealing in regards to the incorporation of an exclusion clause in a contract?
If C knew or should have known an exclusion clause from previous contracts, then it is held to still exist even if it was not expressly stated on the subsequent occasion.
Case for previous course of dealing for the incorporation of an exclusion clause into a contract.
Spurling v Bradshaw (1956)
What does the overriding oral statement rule mean?
A statement said verbally can cancel otherwise existing exclusion clauses e.g., something which was written down.
Case for overriding oral statement.
Couchman v Hill (1947)
What does the doctrine of privity usually prevent a third party from relying on?
The terms of a contract including exclusion clauses