Control Of Exemption Clauses

Question 1

L’Estrange v Graucob

Answer 1

Where a party has signed an agreement, in general they are prima facie bound by it, even though they may not have read the contract and been aware of it.

Question 2

Olley v Marlborough Court Hotel

Answer 2

The exemption clause was not seen until after the contract had been entered into, and was not therefore incorporated in the contract.

Question 3

Spurling (J) Ltd v Bradshaw

Answer 3

If parties have dealth with each other in the past on similar terms, it may be possible to imply knowledge of the clause from those past dealings and thus its incorporation in the contract.

Question 4

Parker v South Eastern Railway Co.

Answer 4

Could not rely on the exemption clause as they could not show that they had instructed the claimant to read the terms.

Question 5

Thompson v LMS Railway

Answer 5

The Court of Appeal held that the company had taken adequate and reasonable steps to bring the clause to the attention of the claimant.

Question 6

Chapelton v Barry Urban District Council

Answer 6

Could not rely on the exemption clause as the existence of the clause was not effectively brought to the attention of the claimant.

Question 7

Thornton v Shoe Lane Parking Ltd

Answer 7

The court refused to allow the exemption clause, on the basis that there had been insufficient attempt made to draw the claimant’s attention to the clause.

Question 8

Hollier v Rambler Motors (AMC) Ltd

Answer 8

The clause had not been incorporated merely because of previous dealings.

For the defendant to rely on the clause, it must have been stated without ambiguity that the defendant would not be liable in the event of its own negligence.

Question 9

Stevenson and Another v Rogers

Answer 9

the phrase ‘in the course of business’ in S14 UCTA 1977 was interpreted as covering the sale of the fishing boat, even though the seller was in the business of fishing rather than selling boats.

Question 10

Unfair Contract Terms Act 1977

Answer 10

1. S1: applies to business-to-business contracts that involve liability
2. S8: applies to all contracts
3. S1(3): defined business liability as liability that arises from things done or to be done by a person in the course of a business whether his own business or another’s, or from the occupation of premises used for business purposes of the occupier.
4. S5 exclude the following contracts in the Act:
   > Contracts of insurance
   > Contracts for the transfer of land
   > International commercial contracts
5. S2
   Negligence liability
   > S2(1): liability cannot be restricted o excluded in respect of liability for death or personal injury resulting from negligence
   > restricted to business liability
6. S3
   Liability arising in contract
   > regulates clauses which seek to restrict or exclude liability for breach of contract
   > now only deals with the contracts between businesses where one seeks to rely on their standard terms of business
7. S11
   Reasonableness test
   > S11(5): places burden of proving that a clause is reasonable on the party seeking to rely on the clause.
   > Reasonableness is determined by reference to the factors set out in S11 and the guidelines set out in Schedule 2.
   » Relevant consideration when assessing reasonableness: the strength of the bargaining position of the parties.
   » Schedule 2 guidelines only apply to S6 to S7, but they have informed the case law in relation to the interpretation of the Act in general

Question 11

Consumer Rights Act 2015

Answer 11

1. S61: applies to contract between a trader and a consumer
2. S2
   Key definitions
   > S2(2): trader - a person acting for purposes relating to that person’s trade, business, craft or profession, whether acting personally or through another person acting in the trader’s name or on the trader’s behalf
   > S2(3): consumer - an individual acting for purposes that are wholly or mainly outside that individual’s trade, business, craft or profession
   > S2(7): business - includes the activities of any government department or local or public authority (including universities)
   > S2(8): goods - any tangible moveable items
   > S2(9): digital content - data which is produced and supplied in digital form
3. S31
   Exclusion of liability in goods contracts
   > Outlines all matters that cannot now be excluded, incuding goods need to be of satisfactory quality, goods need to be fit for purpose and goods must match their description.
4. S57
   Exclusion of liability in service contracts
   > Enforces consumer’s rights to have any contracts to provide services performed to a reasonable standard.
5. S62
   Requirement for contract terms to be fair
   > S62(4): a term in a consumer contract will be unfair if it contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations under the contract to the detriment of the consumer.
   > S62(5): fairness test, whether a term is fair is to be determined by taking into account the nature of the subject matter of the contract, or by reference to all the circumstances existing when the term was agreed, and to all the other terms of the contract or any other contract on which it depends
6. S65
   Negligence liability
   > Reflects the old provisions under S2 UCTA 1977.
7. S68
   Requirement for transparency
   > S68(1): requires the trader to ensure that a written term of a consumer contract or notice is transparent
   > S68(2): states that a consumer notice is transparent if it is expressed in plain ineligible language and legible