Contractual Terms - Concepts of fairness Flashcards
In relation to exemption clauses and unfair terms (34 cards)
What is procedural fairness?
this is about how the contract is entered. Rules that require notices to be prominent, or terms to be clear, reflect the concept of procedural fairness
What is substantive fairness?
this is about the law intervening when terms are really one sided and impose a heavy burden on a party
What is needed in order for an exemption clause to be upheld?
It must satisfy the common law rules on incorporation.
When would a party be deemed to have notice of the terms of a document even without reading the terms?
If a contractual document containing the contractual term is signed by the party affected by the term that party will be deemed to have notice of the terms
What was held in L’Estrange v Graucob?
Terms were held part of the contract despite the machine being in broken conditon - buyer did not read terms.
What was held in Curtis v Chemical Cleaning Co?
if the nature of a term has been misrepresented by the other party, or his or her agent, that party cannot rely on the term beyond the extent to which it has been misrepresented, even if the misrepresentation is innocent.
What about terms incorporated in an unsigned document?
Terms contained in such a document will only be incorporated into the contract if the party affected by them had reasonable notice of them, even if, in fact, s/he does not actually know of them
What is meant by reasonable notice?
In this context ‘reasonable’ notice means ‘notice’ sufficient to have brought the existence of the clause to the attention of a reasonably alert and attentive recipient.
What are two distinct elements in the issue of ‘reasonableness’ of notice?
firstly when the notice was given and, secondly, even assuming it was given and received ‘in time’ how ‘reasonable’ on the facts it seems to be. - notice of a term must have been given to the affected party at or before the time the contract was made.
What was held in Olley v Marlborough Court Hotel?
Hotel liable - exemption clause back of bedroom - notice after contract had been made.
What is held as reasonable notice? Parker v South Eastern Railway
Reasonable person expects terms and should read them. Clause held effective as part of contract
What was held in Chapelton v Barry?
Clause not part of contract - term not on contractual document.
Really onerous terms - What did Denning state in Spurling v Bradshaw and Thornton v Shoe Lane Parking?
The more unreasonable the clause, the more greater the notice which must be given of it.
What was held in Interfoto Picture Library v Stiletto Visual Programmes?
Clauses in which are too onerous can be held not enforceable.
What about non-standard claimants?
Thompson v LMS Railway - reasonable person can read terms. Unless written in foreign language (Geier v Kujawa, Western and Warne Bros)
What is held if both parties have been involved in previous dealings?
Spurling v Bradshaw - Terms had alreayd been previously incorporated from previous dealings despite arriving late.
Hollier v Rambler Motors - Dealings were held not sufficiently frequent so could not rely on past to incorporate dealings - same in McCutcheon v David Macbrayne Ltd
What is the limits of the incorporation rules?
- highlighting rule
Transparency required is low - little notification of terms will suffice.
Higher standard of transparency in unsigned documents. - does not apply to terms excluding liability for negligence causing loss of or damage to property, late delivery of goods, unfair bank charges.
What is the contra proferentem rule?
Interpretation of a clause narrowly against the party relying on it.
What is the guidance on the exclusion of negligence was provided in Canada Steamship Lines v The King?
- Where the wording actually states it excludes liability in negligence, then it should have that effect.
- If the wording does not actually refer to negligence, the court has to work out if the wording is wide enough to cover negligence.
- If the words are wide enough to cover liability in negligence, the court should see if there are other possible types of liability that could have been intended to be covered by the clause.
What are the limits to the contra proferentem rule?
If the meaning of the clause is clear and free from any doubt, then the court contra proferentem approach has no scope to apply.
What was held in the case of Photo Productions v Securicor 1980?
The House of Lords (led by Lord Wilberforce) held that this covered the liability even for deliberate acts. It could not have been given any other meaning. - Clear wording - no scope
What is fairness in substance?
Terms may be taking away important rights or imposing unreasonable burdens.
Statutory Controls - used to overcome issues caused by exemption clauses and unfair terms.
Unfair Contract Terms Act 1977
Consumer Rights 2015
What is The Unfair Contract Terms Act 1977?
Only concerned with business contracts.
