CONTROL OF EXEMPTION CLAUSES Flashcards
limitation clauses which seek to limit or exempt one of the parties from liability
COMMON LAW 3 STAGE PROCESS IN ESTABLISHING WHETHER AN EXEMPTION CLAUSE CAN BE RELIED UPON:
- Must be shown its an actual term of the contract
- needs to be determined whether it attempts to protect the party inserting it into the contract
- there are some tests designed to restrict the use of such clauses
- RULES OF INCORPORATION
where a party has signed an agreement they are generally prima facie bound by it though they may not have read the contract or are aware of it.
(L’ESTRANGE V GRAUCOB)
- RULES OF INCORPORATION
when dealing with contracts that are not signed the first principle by the courts to add an exemption clause is whether the party had actual knowledge of the clause at the time of entering into the contract
(OLLEY V MARLBOROUGH COURT HOTEL)
3.RULES OF INCORPORATION
if the parties have dealt with each other in the past on similar terms it may be possible to imply knowledge of the clause from past dealings and thus its incorporation into the contract.
(SPURLING LTD V BRADSHAW)
- RULES OF INCORPORATION
courts will not generally accept an exemption clause incorporated into a contract unless the affected party has been reasonably aware of it before or at the time of entry of the contract. party relying on exemption need not show they brought it to the attention of the other party but that they took reasonable steps to bring it to their attention
(THOMPSON V LMS RAILWAY)
- RULES OF INCORPORATION
an exemption clause will not be incorporated into the contract when on an objective analysis, it is contained in a document that will normally not be deemed as being a contractual document or carrying contractual significance.
(CHAPELTON V BARRY UDC)
- RULES OF INCORPORATION
party seeking to rely on the exemption clause must show that the clause was brought to the attention of the other party and thus incorporated in the contract
(THORNTON V SHOE LANE PARKING)
REASONS FOR FAILURE OF AN EXEMPTION CLAUSE
- where exemption clause appears to have been successfully incorporated into the contract it still does not mean that it will avoid liability in all cases
- CONTRA PROFERENTUM CLAUSE
- NEGLIGENCE
- SERIOUSNESS OF BREACH
- MISREPRESENTATION
- OVERRIDING UNDERTAKINGS
THE CONTRA PRROFERENTUM RULE
any ambiguity in the exemption clause will be interpreted by the courts in the manner least favourable to the relying party
(HOLLIER V RAMBLER MOTORS)
(HOUGHTON V TRAFALGAR INSURANCE)
STATUTE LAW (UCTA 77)
(S1) applies to b2b contracts that involve liability
- (s1(3)) definition of business liability
UCTA 77 Act will not apply to the following contracts …
as they are excluded by (s5)
- contracts of insurance
- contracts for the transfer of land
- international commercial contracts
UCTA 77 (S2(1))
- negligence liability
liability cannot be restricted or excluded in respect of liability for death or personal injury resulting from negligence
UCTA 77 (S3)
LIABILITY ARISING IN CONTRACT
regulates clauses which seek to restrict or exclude liability for breach of contract
UCTA (S11(5))
REASONABLENESS TEST
- places the burden of proving that a clause is reasonable on the party seeking to rely on the clause
- the reasonableness is determined by reference to the factors set out in s11 and guidelines set out in schedule 2
- schedule 2 only applies to ss 6-7 of the Act
STATUTE LAW (CRA 2015)
UPDATES THE LAW ON UNFAIR CONTRACT TERMS IN CONTRACTS BTW A TRADER AND A CONSUMER AND BRINGS INTO EFFECT IN UK LAW THE EU UTCCD 93/13/EEC
- applies to b2c contracts whether or not negotiated by the consumer and also covers consumer notices
