exclusion clauses Flashcards
what are exclusion clauses?
express terms in a contract that seek to prevent a party from being liable for a breach of contract
why are exclusion clauses sometimes unfair?
businesses have dominance over consumers, especially using standard form contracts
what are the two rules the courts devised to indicate whether to accept a clause’s operation or not?
1-the clause must be incorporated into the contract as part of it
2-the clause will be constructed by the courts and it operates to protect the party wishing to rely upon it from damage caused and not seek to gain an undue advantage from it
how must a clause be incorporated into a contract?
must be an express term that is brought to the attention of the other party before or at the time of contract formation
what are the rules on exclusion clauses in signed contracts?
1-you agreed to what you signed for
2-you are bound by the exclusion clause whether or not you read the contract in full
what is said about contracts that aren’t necessarily signed?
the clause is only binding if the parties had express knowledge of it at the time of the contract
would a ticket with an exclusion clause on the reverse be sufficient?
no
what are the 2 rules on knowledge of the exclusion clause that must be enforced?
1-did the party have knowledge of the clause? (includes if they had contracted before and should be expected to know)
2-were reasonable steps taken to bring the exclusion clause to the attention of the party?
what is meant by ‘binding on the basis of previous knowledge’?
a clause can be incorporated through a party’s previous dealings, even if it wasn’t brought to their attention this time
what is meant by ‘incorporated through trade custom’?
both parties are aware that such terms are commonplace as they both trade in the same/similar markets
how are clauses constructed in common law?
the courts interpret/construct them to see if it will achieve what it is meant to without unduly penalising the other party
what is the contra proferentem rule?
1-any ambiguity with regard to the clause must be interpreted against the party proposing/having drafted the clause and wishing to rely upon it
2-where an exclusion clause is held to be valid in situations where the claimant alleges negligence, very clear words must be used
what does UCTA 1977 stand for?
Unfair Contract Terms Act 1977
how was the validity of exclusion clauses decided before the UCTA?
common law decisions of judges
why was the UCTA introduced?
to give consumers greater protection, it makes certain exclusion clauses void
what is the difference between what areas the UCTA covers and the areas that the Consumer rights act cover?
UCTA tends to cover business contracts, while CRA covers consumer contracts
what sections of the UCTA cover void exclusion clauses?
-s2(1) - a party can’t rely on an exclusion clause that tries to exclude/restrict their liability for death/personal injury resulting from negligence
what sections of the UCTA covers ‘valid if reasonable’ exclusion clauses?
-s2(2) - in the case of other loss/damage, a person can’t exclude/restrict their liability for negligence except when the term/notice satisfies the test for reasonableness
-s3 - when a consumer deals on a business standard form of contract, the business can’t exclude its liability for breach, or provide a substantially different performance/no performance of the contract unless it’s actions satisfy the requirement of reasonableness
what are the sections that create a test for reasonableness?
-s11(1) - the term shall have been fair and reasonable, know to/in contemplation of the parties when the contract was made
-s11(2) - regard shall be had in particular to the matters specified in s2, that a term which tries to restrict/exclude any relevant liability is not a term of the contract
-s11(3) - in relation to a notice, it should be fair and reasonable to allow reliance on it
-s11(4) - whereby reference to a contract term/notice, a person seeks to restrict liability to a specified sum of money, regard shall be had in particular to the resources which he could expect to be available to him for the purpose of meeting the liability, and how far it was open to him to cover himself by insurance
-s11(5) - it is for those claiming that a contract term/notice satisfies the requirement of reasonableness to show that it does
what does s31 of the consumer rights act 2015 cover?
-liability that cannot be excluded or restricted (goods)
-situations where exclusion clauses can’t be used includes quality of goods, description of goods and shipping of goods
-the seller can’t opt out of their statutory rights to the buyer
what does s57 of the consumer rights act 2015 cover?
-liability can’t be excluded or restricted (services)
-includes: the service is performed with reasonable care/skill, info about the trader and their service, and can’t stop/restrict the buyer from a right or remedy
-can’t exclude themselves from their statutory responsibilities by including exclusion clauses, and cannot exclude the buyer from their statutory rights
what does s65 of the consumer rights act 2015 cover?
-the bar on exclusion/restriction of negligence liability
-traders can’t rely on a term inserted in a consumer contract/notice which excludes/restricts liability for death/personal injury from negligence
-the person isn’t taken to have voluntarily accepted any risk merely because they agreed to/knew about the term/notice
L’Estrange v Graucob
incorporation of EC,
contract said D wouldn’t be responsible if machine he sold broke, it did, L bound by the contract since she signed it, even tho she didn’t read it
Olley v Marlborough court ltd
representation isn’t a term unless both parties where aware of it when making contract,
o booked into m’s hotel, sign in room said hotel isn’t responsible for items lost/stolen, fur coat was stolen, contract was made at reception, so room sign was too late to be part
Chapelton v Barry UCD
incorporation of clause
c hired deckchair at beach, paid 2p, given a ticket, back of it said council wouldn’t be liable for any accident or damage, chair collapsed, c injureed, sued for damages, court said it wasn’t part of contract because it was given on the ‘receipt’ after contract was made
Hollier v Rambler Motors (AMC) ltd
construction of the clause
c’s car damaged in a fire in d’s garage, previous occasions had a standard form that had an EC for liability for fire damage, but this time it hadn’t been signed
CoA said the standard form wasn’t incorporated just because of previous dealings
