Exclusion Clauses Flashcards
What is an exclusion clause
Excludes or limits liability for breach of contract - often found on contracts or notices. Parties can agree to any terms they like under freedom of contract, but often one party is stronger.
How are contracts interpreted
If the words in the contract are clear and unambiguous, it will be presumed the parties meant what they wrote. (Pink Floyd Music v EMI Records)
If the words are not clear and unambiguous, an objective test is applied - what would a reasonable man interest the contract to mean? (Investors compensation scheme v West Bromwich Building Society)
It is possible to add a commercial, common sense angle.
CRA 2015 s69 says that where there could be different interpretations, the one most beneficial to the consumer is adopted
3 common law controls
- whether agreement is signed
- whether any notice with the term in it is incorporated in the contract
- whether the term is incorporated as a result of previous dealings between parties
Cases for signing agreement
L’Estrange v Graucob - she was bound by contract even thought she hadn’t read it as she had signed it
Curtis v Chemical Cleaning and Dyeing - if party a queries and party b misrepresents, contract can be interpreted through the misrepresentation
Cases for incorporation of exclusion clauses
Olley v Malborough Court Hotel and Thornton v Shoe Lane Parking - exclusion must be brought to attention before acceptance of the contract
Chapelton v Barry - must be a distinction between a contractual document and a receipt
Parker v SE Railway - There must be reasonable steps to draw the clause to the parties attention
Cases for term incorporated as a result of previous dealings
Hollier v Rambler - where a client has signed the same document many times, a new contract can be presumed to have the same exclusion
McCutcheon v David MacBrayne - unless there is no consistent course of conduct
Rights of 3rd party to exclude liability
Scruttons v Midland Silicones - 3rd party enlisted to unload ship could not take advantage of limitation of damages between A and B
New Zealand Shipping v Satterthwaite - exclusion clause covered anyone who assisted B
Contracts (Rights of Third Parties) Act 1999 allows 3rd party to enforce any terms which would exclude or limit liability
Contra preferum rule
Interprets terms in a contract against the person who introduced them and seeks to rely on it. Now has little application to commercial contracts where parties are on equal terms.
Transocean Drilling v Providence Resources and Perisimmon Homes v Ove Arup - to be used for one sided ambiguous situations, not clear
Oliver Nobahar-Cookson v The Hut Group - it was beneficial to use a narrow construction
Unfair Contract Terms Act 1977
For non-consumer contracts
S2(1) cannot exclude liability for death or personal injury caused by negligence
S3 - imposes reasonableness test
Warren v Truprint - s11(5) requires party who inserts the clause and seeks to rely on it to show that it is reasonable in all circumstances
Smith v Eric - knowledge test, was it reasonable in light of what was known to the parties at the time
Watford Electronics v Sanderson - exclusion clause was reasonable since parties were of equal bargaining power
George Mitchell v Finney Lock Seeds - s11(4) relates to limitation clauses not exclusion clauses
CRA 2015 exclusion clauses
Includes fairness test, a grey list of potentially unfair terms, and provision that main subject matter or terms that set the price are only exempt from the test of fairness if they are “transparent and prominent”.
S31 prohibits a term excluding or limiting liability for s9 (satisfactory quality), s10 (fit for purpose), s11(as described), s14 (match model).
S57 prohibits a term excluding or limiting liability for s49 (reasonable care and skill), s50 (information binding), s51 (reasonable price), s52 (reasonable time).
S65 excludes limiting liability for death or personal injury resulting from negligence
S62 covers general fairness of terms - anything that puts the consumer at a disadvantage by limiting rights or increasing obligations disproportionately.
