Exclusion and Limitation Clauses Flashcards
What are the steps for exclusion and limitation clauses?
Define
3 common law controls
Signing
If notice with term is incorporated
Incorporated by previous dealings
3rd parties
Contra proferentem
Statutory controls
Reasonableness test
What is an exclusion clause?
A clause which excludes (or limits) for a breach of contract and possibly also in areas such as negligence
What does an exclusion/limitation clause need to be in order to be valid?
Incorporated into the contract
What are the 3 common law controls to check if the clause is incorporated?
Whether the agreement was signed
Whether any notice with the term in it is incorporated
Whether the term is incorporated as a result of previous dealings (implied)
How does signing the contract incorporate the exclusion/limitation clause?
The parties are bound - caveat emptor (let the buyer beware)
Which case shows an exclusion/limitation clause being incorporated due to the contract being signed?
L’Estrange v Graucob
If the meaning of a clause is questioned prior to signing, does the oral statement or written agreement take precedence?
Oral statement (though this is hard to prove so better to get it in writing)
Which case shows the oral statement taking precedence over the written agreement?
Curtis v Chemical Cleaning
When does the common law control of the notice being incorporated into a contract occur?
Normally in an unwritten contract, where a notice becomes the contract (e.g. parking notices) - therefore where it is, is key
Which case shows a clause being incorporated because the notice was incorporated?
Thompson v London, Midland and Scotland Railway Co
Does an exclusion/limitation clause have to brought to the attention of the other party?
Yes, and it must be before acceptance takes place
Why must an exclusion clause notice be brought to the attention of the other party pre-contract?
They have to be voluntarily contracting
Which case shows an exclusion clause must be brought to the other party’s attention pre-contract?
Olley v Marlborough Court
Chapelton v Barry
Does an exclusion/limitation clause have to be in a document which holds contractual significance?
Yes (e.g. a receipt doesn’t count since acceptance already took place)
Which case shows an exclusion/limitation clause has to be in a document which holds contractual significance?
Thornton v Shoe Lane Parking
How can exclusion/limitation clauses be incorporated as a result of previous dealings?
If the parties have dealt on the same terms in the past, it is possible to imply the knowledge of the clause if there have been a consistent course of dealings
Which case shows exclusion/limitation clauses can be incorporated as a result of previous dealings?
Hollier v Rambler Motors
Which case shows an exclusion/limitation clause not incorporated from previous dealings due to a lack of consistency?
McCutcheon v MacBrayn
Can an exclusion/limitation clause offer a 3rd party protection?
Common law says no, but Contracts (Rights of 3rd Parties) Act 1999 says a 3rd party can rely on an exclusion/limitation clause if the other requirements of the act are met (contra proferentum rule)and the act is not excluded
Which case shows exclusion/limitation clauses cannot offer a 3rd party protection?
Scruttons Ltd v Midlands Silicones
What is the contra proferentum rule?
Where there is doubt regarding the meaning of a term, the word will be construed against the creator of the clause
Which case demonstrated the contra proferentum rule?
Transocean Drilling UK Ltd v Providence Resources PLC
Which 2 statutes show rules on exclusion/limitation clauses?
Unfair Contract Terms Act 1977 for non-consumer contracts
Consumer Rights Act 2015 for consumer contracts
What controls does the Unfair Contract Terms Act 1977 contain?
s2(1): cannot exclude liability for death or personal injury caused by negligence
s2(2): for other loss/damage, they cannot restrict liability for negligence (unless reasonable)
Which section of the Unfair Contract Terms Act 1977 imposes a reasonableness test?
Section 3 (actual test is in section 11 and schedule 2)
What is the reasonable test of the Unfair Contract Terms Act 1977?
Whether it was reasonable to insert the clause based on what the parties knew at the time (this is the knowledge test).
It is for the judges to decide, depending on the circumstances - the burden being on the person who inserted the clause to prove reasonableness
Which case shows the reasonable test of the Unfair Contract Terms Act 1977?
Smith v Eric Bush (exclusion clause)
George Mitchell v Finney Lock Seeds (limitation clause)
Which case shows
