Control of exemption clauses Flashcards
What is the three stage process to determine if something is an exemption clause?
o It must be shown as an actual term of a contract
o It needs to be determined whether it actually attempt sot protect the party inserting it into the contract
o There are a number of tests designed to restrict the use of such clauses
L’estrange v Graucob (1934)
Facts: The claimant purchased a cigarette vending machine for use in her cafe. She signed an order form which stated in small print ‘Any express or implied, condition, statement of warranty, statutory or otherwise is expressly excluded’. The vending machine did not work and the claimant sought to reject it under the Sale of Goods Act for not being of merchantable quality.
Held: In signing the order form she was bound by all the terms contained in the form irrespective of whether she had read the form or not. Consequently her claim was unsuccessful.
Olley v Marlborough Court (1949)
Facts: The claimant booked into a hotel. The contract was made at the reception desk where there was no mention of an exclusion clause. In the hotel room on the back of the door a notice sought to exclude liability of the hotel proprietors for any lost, stolen or damaged property. The claimant had her fur coat stolen.
Held: The notice was ineffective. The contract had already been made by the time the claimant had seen the notice. It did not therefore form part of the contract.
Spurling v Bradshaw (1956)
Facts: The defendant used the services of a warehouse to store goods on a regular basis. Each time he delivered goods to the warehouse he was asked to sign an invoice which contained an exclusion clause. This invoice came after the contract had been agreed. On one occasion he stored some barrels of orange juice and again signed the invoice. When he went to pick them up some of the barrels were empty and one contained dirty water. He refused to pay for the storage. The claimant warehouse owners brought an action for the agreed price of storage relying on the exclusion clause to demonstrate that they were not liable for the damage to the goods. The defendant argued the clause had not been incorporated into the contract as he signed the document after the contract was made.
Held: The clause was incorporated through previous dealings. The defendant would have been aware of the term from the previous contracts and therefore it did form part of the contract. The claimant was entitled to payment and the defendant had no right to claim compensation for the damage to the orange juice.
Parker v South Eastern Railway co (1877)
Facts: The claimant left luggage at a station and was given a ticket. The ticket had a clause on the back stating that they would not be viable for luggage worth more than 10 pounds.
Held: IT was not made clear to the claimant and the defendants could not prove they had instructed the claimant to read the terms and lost the case.
Thompson v LMS Railway (1930)
Facts: The claimant who was illiterate sent her niece to buy a railway ticket which stated to look at the back of it. The back of the ticket stated that it was issued subject to the conditions contained in the timetable. One of which was an exemption clause.
Held: It was held that the company had taken the steps to bring it to the attention of the claimant.
Chapelton v Barry UDC (1940)
Facts: The claimant hired deck chairs and written on the back of the tickets was ‘The council will not be liable for any accident or damage arising from the hire of the chair’. One of the chairs collapsed and injured the claimant.
Held: The defendants could not rely on the exemption clause as it was not effectively brought to the attention of the claimant.
What other reasons are there for a failure of an exemption clause?
- Contra proferentem rule
- Negligence
- Seriousness of the breach
What does the contra profenturam rule state?
o The exemption clause is usually constructed against the person relying on it. If three is any ambiguity it will be interpreted in the manner least favorable to that person.
Hollier v Rambler Motors (1972)
Facts: The claimant had used the services of the defendant garage on 3-4 occasions over a five year period. Each time he had been asked to sign a document excluding liability for any damage. On this occasion the contract was made over the phone and no reference to the exclusion clause was made. The garage damaged the car during the repair work and sought to invoke the exclusion clause through previous dealings.
Held: There was not a sufficient number of or regularity of transactions to amount to a previous course of dealings capable of incorporating the exclusion clause. It was not reasonable to expect the claimant to remember the clause from one transaction to the next. Consequently the garage was liable to pay for the damage.
What does negligence refer to?
o The courts insist that very clear words are used if an exemption is being sought for negligent acts.
White v John Warwick & Co Ltd (1953)
Facts: The claimant hired a bike from the defendants and whilst he was riding their saddle tipped forwards and he was injured. The contract stated ‘nothing in this agreement shall render the owners liable for any personal injury’.
Held: The court found that it was too ambiguous and that it only excluded liability for breach of contract. The defendants were liable in negligence.
What does seriousness of the breach refer to?
o If the courts decide there has been a fundamental breach, they must then decide whether any exemption clause is sufficient to limit or exclude a party’s liability for the breach. This is now governed mostly by the Unfair Contract Terms Act 1977.
What is the Unfair Contract Terms Act 1977?
UCTA applies to all contracts that involve ‘business liability’ – this is defined in s1(3) as anything done in the course of business or the occupation of premises for business purposes.
Stevenson and another v Rogers (1999)
Facts: A fisherman sold his boat, but afterwards claimed that his business was to sell fish, not boats.
Held: The court interpreted the section to include the selling of bots under the fisherman business.
