exclusion causes Flashcards
what is meant by exclusion clause?
a term in a contract that prevent one party being liable for breach of contract.
may try to limit liability by attempting to restrict the value of any claim to the purchase price of the goods or
exclude any claim for defect to 14 days from the date of the contract
many contracts attempt to exclude the rights of third parties act
they can seem unfair as one party is in a better positioin than the other.
as they stop being liable for breach of contract
what is meant by common law controls?
the courts will consider whether the exclusion clause is a term of the contract.
what three areas do they consider?
1 whether the agreement is signed
2 whether any notice with the term in it is incorporated in the contract
3 whether the term is incorporated as a result of the previous dealing of the parties.
dont have to be all three
whether the agreement is signed
if a party has signed a written agreement it is presumed that they are bound by the agreement.
if the exclusion clause was therefore in that agreement and you signed it then it would be included
if one party raises a query regarding the exclusion casue and in response to this the defendant misrepresents the clause which induces the claimant o sing the contract then the term wont apply.
L’Estrange v Graucob 1934
Mrs L’ Estrange bought a cigarette vending machine from the defendant for her café. She signed s contract including a clause which excluded all implied conditions and warranties. The machine didn’t work properly and L’ Estrange relied on the implied term of fit for purpose. However, she couldn’t rely on this because she had signed the contract with the exclusion clause even though she hadn’t read that part of the contract.
Curtis v chemical cleaning and dyeing co 1951
Mrs Curtis took her wedding dress to be cleaned and was asked to sign a document that exempted the cleaners from liability to any damage howsoever arising. Before signing she was asked what exactly what she was signing and they stated it excluded liability just for sequins and beads when it was returned it had a large stain on it they couldn’t rely on the signed exclusion clause because they had verbally mispresented this.
whether any notice with the term in it is incorporated in the contract by reasonable notice
- this typically involves unwritten contracts
- incorporation of the term can only apply if it was brought to the attention before the contract was made
- you cannot introduce new terms to a contract after acceptance.
unless the original contract allows for variation in terms e.g mobiled phone price variations - e.g. if you park your car and the notice says this car park does not take responsibility for any damage to your car’ this is an exclusion clause for an unwritten contract and will be incorporated as it is given with reasonable notice before having to pay/enter into the contract.
- issues arise when the terms aren’t made clear when the contract is made
Olley v Marlborough court hotel 1949
claimants booked into the hotel at reception. A contract was formed at this point. They later went out leaving their key at reception as they were required to do so. Whilst they were out, someone stole their key and stole things from their room. Hotel claimed they weren’t liable because of their exclusion clause. clause wasn’t incorporated as the notice was inside olley’s bedroom which was after they had entered into the contract downstairs therefore no reasonable notice was given.
Chapelton V Barry urban district council 1940
Mr Chapelton hired two deck chairs on the beach at Barry island, and received two tickets from the councils beach attendant on paying the hire charge for the chairs. Next to the deckchairs was a sign which gave the price and time limit, but did not refer to any exclusion clauses. however, on the back of the tickets stated ‘ the council will not be liable for any accident or damage arising from the hire of the chair ‘.
Mr chapelton did not read the ticket as he thought it was merely a receipt so he would not be asked to pay again during the day. The canvas on one chair was defective and the chair collapsed , injuring him the council tried to rely on their exclusion clause as a defence to a claim for his injuries.
not reasonable
Thompson v LMS Railway 1930
Mrs Thompson was illiterate and could not read. she went on a railway excursion and was given a ticket with the words excursion for conditions see back.
on the back of the ticket was a notice referring customers to the conditions printed in the company’s timetables. These conditions excluded liability for any injury. she was injured on the journey and claimed for damages.
reasonable notice given
Thornton v shoe lane parking Ltd 1971
not reasonable
The claimant was injured in a car park owned by the defendants. At the entrance to the car park by the barrier where a ticket was issued by a machine there was a notice that as well as giving charges stated that parking was at the owners risk . on the ticket was printed the words. this ticket is issued subject to the conditions of issue as displayed on the premises.
notices inside the car park then listen the conditions of the contract including an exclusion clause covering both damage and personal injury.
Whether the term is incorporated as a result of previous dealing
if the parties have:
dealt consistently and
dealt on the same terms before
the we can imply knowledge of the past dealing to this one
it will be reasonable notice if
- it was given before the contract was made
attention was drawn to the exclusion clause notice
it is separate to a reciepts (chapelton)
Hollier v Rambler Motors 1972
Mr Hollier phoned Rambler and spoke to the manager. He told him he wanted some repair work done to his car. Manger said they couldn’t do anything about it for a moment bit if Hollier had sent it in they could sort it out. Hollier agreed and those were the only terms said over the phone. Fire broke out at the garage and his car was damaged. He tried to sue for ‘reasonable care’ hollier however had been to the garage 3-4 times in the past five years and had always signed an exclusion clause for damage through fire. court decided it was possible the terms would be implied.
a clause that makes a party not liable for a breach
exclusion clauses and third parties
- third parties cant usually rely on the terms of a contract
e.g in scruttons v midland silicones, the claimant was the owner of goods which were shipped by a carrier. Contract limited the liability of the carrier for damage to the goods of $500. Carrier then contracted with a third party , the defendant to unload the goods and caused damage more than $500.as the defendant wasn’t privy to the contract, the exclusion clause of $500 didn’t apply to him and the claimant could sue for more.
The contracts right of third parties act 1999 now permits the third party to enforce any terms which would exclude/limit liabilty.
what’s the contra proferentem rule?
contra proferentem- where there is doubt about the meaning of a term in a contract, the words will be construed against the person who put them in the contract.
doesn’t just apply to exclusion clauses but usually only use it in that case.
the term will be used against the person who wishes to rely on it because they are the one who have clearly broken their contract and are trying to evade liability.
- it is used when there is more than one interpretation for the clause e.g. a literal meaning and the purposive approach. the person seeking to rely on it will opt for the broad meaning and the other person will rely on the narrow meaning.
this principle now has little application to commercial contracts where the parties are bargaining on equal terms.
Transoceaon Drilling v Providence Resources 2016
Claim for loss of use from providence. Normally its assumed that exclusion clauses should be construed contra preferentem. However, the agreement is this case was a sophisticated arrangement drawn up for parties of equal bargaining. Therefore, the courts stated that the contra preferentem principle is to be used where the term is both one- sided and ambiguous.
Statutory control of Exclusion clauses:
if an exclusion clauses is incorporated there are statutory provisions which may make the clauses invalid and of no effect.
these controls exist to deal with an imbalance between the parties to a contract
for most business to consumer contract there is no bargaining power for the consumer which is why there are two principle provisions through the acts.
1 The unfair contract terms act 1977
2 the consumer rights act 2015
The unfair contract terms act 1977
This is mainly used for protection in non- consumer contract i.e. business to business
- test of reasonableness to be applied to the exclusion clauses
- certain types of exclusion clauses cannot e incorporated due to prohibition by the UCTA E.G
-under s2(1) a person cannot exclude liability for death/personal injury caused by negligence
- under s6 (1) the implied condition as to title cannot be excluded
- section 3 stated that there must be a test of reasonableness to contracts where one party is subject to the other’s standards written terms of business
s11 contains guidelines on what is reasonable. The test ultimately depends on all the circumstances of the case and ultimately is for the judges to interpret
s11 also requires the party who inserts the term to show that it is reasonable in all the circumstances.
Warren v Truprint 1986
Contract contained a limitation clauses where the defendants were responsible only for a replacement film in the event of failure to print and develop the photos. Truprint were unable to show that this was reasonable when it lost a couples silver wedding photos.
what does the consumer rights act 2015 include?
s62
a fairness test for enforceability of terms and of consumer notices.
-a provision that the main subject matter of the contract or terms that set the price are only exempt from the test of fairness if they are transparent and prominent.
-a ‘grey list’ of potentially unfair clauses in consumer contracts.
- three main sections of the act which sets out the bars on exclusion clauses 31,57,65
consumer rights act 2015 section 31
- This section prohibits a term excluding/limiting liability for the following sections :
-s9 satisfactory quality
s10 fit for a particular purpose
s11 goods to be as described
s14 goods to match a model
s15
consumer rights act 2015 section 57
this section prohibits a term excluding/limiting liability for the supply of services:
- s46 reasonable care and skill
s50 information about the trader being binding
- s 51 reasonable price
s52 reasonable time
what does s65 prohibit?
prohibits exclusion for death or personal injury resultinh from negligence
what does section 62 state?
states that all consumer contract terms and notices must be fair. The act defines ‘unfair terms’ as those which put the consumer at a disadvantage by limiting the consumers rights or disproportionately increasing their obligation compared to the traders obligation. This fairness test has a list of grey terms too (terms that may be considered as unfair) .
