Exclusion and limitation clauses

Question 1

What are exclusion clauses

Answer 1

Terms in a contract which excludes liability of a party for breach of contract.

Question 2

What are limitation clauses

Answer 2

Terms that limit the liability if a contract is breached

Question 3

What are the 3 common law controls that are exclusion clauses

Answer 3

Signature, reasonable notice and previous cause of dealing

Question 4

What is meant by signature as an exclusion clause

Answer 4

If a document is signed at the time of making the contract, its contents become terms of that contract, regardless of whether they have been read and understood

Question 5

What case would you use for signature

Answer 5

L’Estrange v Graucob

Question 6

However what other type of clarification of a term may not exclude liability in signature

Answer 6

Verbal or alternative written clarification

Question 7

What case do you use for verbal or alternate written clarification of a term
may not exclude liability under signature

Answer 7

Curtis v Chemical Cleaning and Dyeing

Question 8

What is meant by reasonable notice under exclusion clauses

Answer 8

If separate written terms are presented, those terms only become part of the contract if it can be said that the recipient had reasonable notice of them

Question 9

What case do you use for reasonable notice under exclusion

Answer 9

Olley v Marlborough Court Hotel

Question 10

What is meant by previous course of dealings under exclusion clauses

Answer 10

If two parties have previously made a series of contracts between them, and those contracts contained an exemption clause, that clause may also apply to a
subsequent transaction, even if the usual steps to incorporate the clause had not
been taken

Question 11

What case do you use for previous course of dealings

Answer 11

Hollier v Rambler Motors

Question 12

What is the contra proferentem rule

Answer 12

If the meaning of a term is unclear, the words will be understood against the person who put them in the contract

Question 13

Who is the contra proferentem rule least favourable to

Answer 13

The one who introduced it and tries to rely on it

Question 14

What case do you use for contra proferentem rule

Answer 14

McCutcheon v David MacBrayne Ltd

Question 15

What are the 2 statutory controls that help an imbalance between the parties to contract

Answer 15

Consumer rights act and unfair terms act

Question 16

What are the 3 restrictions on exclusions in contracts between traders and consumers in the CRA

Answer 16

1.A ‘fairness test’ for enforceability of terms and consumer notices
2.A ‘grey list’ of potentially unfair clauses in consumer contracts
3.The test of fairness doesn’t apply to the main subject matter of the contract or terms that set the price if they are ‘transparent and prominent’

Question 17

What does s31 state about excluding or limiting liability in the CRA

Answer 17

Prohibits a term excluding or limiting the liability for s9, 10, 11, 14 and 15
(satisfactory, fir for purpose, as described, match a model and conformity of the goods)

Question 18

What does s57 state about excluding or limiting liability in the CRA

Answer 18

Prohibits a term excluding or limiting liability, for the supply of services for s49, 50, 51 and 52
(reasonable skill and care, binding info, price and time)

Question 19

What does s65 state about excluding or limiting liability in the CRA

Answer 19

Prohibits exclusion or restriction of liability for death or personal injury resulting from negligence

Question 20

What does s62 state about excluding or limiting liability in the CRA

Answer 20

A terms is unfair when it puts the consumer at a disadvantage, by
limiting the consumer’s rights or disproportionality increasing their obligations as compared to the trader’s rights and obligations

Question 21

What does the court take into account with s62

Answer 21

The specific circumstances existing when the term was agreed, other terms in the contract and the nature of the subject matter

Question 22

What does s69 state about excluding or limiting liability in the CRA

Answer 22

If a term or consumer notice could have different meanings, the meaning that is most favourable to the consumer shall prevail.

Question 23

What is the grey list

Answer 23

This is a non-exhaustive list that may be considered unfair

Question 24

What are some examples of what may be considered unfair on the grey list

Answer 24

*Allow disproportionate changes
*Require the consumer to pay for services which have not been
supplied when the consumer ends the contract
*Allow the trader to change the price after the consumer is bound

Question 25

What does the unfair contract terms act provide protection against

Answer 25

Clauses in non-customer contracts

Question 26

What does s2(1) state about the UCTA

Answer 26

Cannot exclude liability for death and personal injury caused by negligence

Question 27

What does s6(1) state about the UCTA

Answer 27

The implied condition as to title (transferring a person’s rights) cannot be excluded

Question 28

What does s3 impose in the UCTA

Answer 28

Reasonableness tests to contracts

Question 30

What case would you use for s3 of UCTA and reasonableness tests

Answer 30

Smith v Eric Bush

Question 31

What does s11 of UCTA state about test of reasonableness

Answer 31

The court should ask itself whether the term in question is a fair and reasonable one to be included having regard to the
circumstances which were, or ought reasonably to have been, known to or in the contemplation of the parties when the contract was made

Question 32

What does schedule 2 provide

Answer 32

The factors for the court to consider in applying the reasonableness test

Question 33

What are the 5 factors the courts will consider from schedule 2 for the reasonableness test

Answer 33

a)The strength of the bargaining positions of the parties
b)Whether the customer received an inducement to accept the term
c) Whether the customer knew or ought to have known of the term
d) Where the term excludes or restricts any relevant liability if some condition is not complied with
e) Whether the goods were made or adapted to the special order of the customer

Question 34

What are the 2 criteria set out in s11(4) for limitation clauses in UCTA

Answer 34

1.The resources that the defendant could expect to be available for meeting their liability
2.How far it was open to the defendant to cover themselves by insurance against any successful claim

Question 35

What cause would you use for the criteria of limitation clauses in s11(4)

Answer 35

George Mitchell Ltd v Finney Lock Seeds Ltd