Exclusion clauses

Question 1

What is the defence of non est factum?

Answer 1

If a party can show that they had no understanding of the contract they signed and there is a fundamental difference between what they though they had signed and what they actually signed, the defence of non est factum can override the contract

Question 2

In what circumstances can an exclusion clause be incorporated into a contract?

Answer 2

1. By notice - the party seeking to rely on the exclusion clause must have taken reasonable steps to bring it to the other party’s attention before or whilst the contract was being made
2. industry custom - can be implied if it is an industry custom to imply such a term, and there have been **regular and consistent dealings ** between parties.

An exclusion clause will be enforced only if it clearly and unambiguously covers the loss suffered

Question 3

Which types of exclusion clauses are automatically void under UCTA 1977?

Answer 3

1. Clauses that attempt to exclude liability for death caused by negligence
2. Clauses that attempt to exclude liability for breach of implied condition re title under SGA or SGSA

Question 4

Which types of exclusion clauses are void unless reasonable?

Answer 4

• excluding liability for any loss (other than death) caused by negligence
• A term on a standard form contract that: (a) excludes liability for breach of contract (b) allows party to render contractual performance substantially different from what was expected, or (3) negates a party’s duty to perform the contract
• Clauses that exclude liability for description, quality, fitness for purpose under SGA or SGSA

Question 5

Consumer Rights Act - Unfairness

Answer 5

Under CRA 2015, a consumer can ask the court to set aside any limitation or exclusion that is unfair (other than those specifying subject matter of contract or price):

> unfair = ‘is contrary to the requirements of good faith’ or ‘causes a significant imbalance’ in the parties rights and obligations under the contract to the detriment of the consumer

Contract terms also have to be transparent according to the CRA 2015

Question 6

Are non-compete clauses allowed in employment contracts?

Answer 6

A noncompete clause in an employment contraxct is an illegal restraint of trade if it is not reasonable in length and geographic scope. It must also seek to protect a legitimate interest

Question 7

Are contracts void or voidable for mistake?

Answer 7

Void

Question 8

What is a common mistake?

Answer 8

Where both parties make the same mistake when the agreement was made eg. believing the subject matter of the contract was in existence when it actually had been destroyed

Question 9

What is a mutual mistake?

Answer 9

Parties are mutually mistaken but about different things: purchase of cotton on board the ship ‘Peerless’ when there are two ships named Peerless and each party was thinking of the other one

Question 10

What is unilateral mistake?

Answer 10

Can be void only if the non-mistaken party knew of the mistake (eg the price seemed to good to be true)

Question 11

What is a mistake as to identity?

Answer 11

Contract can be void for mistake as to identity if one party believes they are entering the contract with the person the other party is pretensinf tor be and the mistaken party would not have entered into the contract if they knew whom they were dealing with

Question 12

When is a contract voidable?

Answer 12

• misrepresentation
• minors (other than for necessaries)
• Under duress (illegitimate pressure, threat to retain goods, one party is in stronger position than the other, and use this in a illegitimate manner)
• ## Undue influence - an outside party blackmails the innocent party into making the contract or uses a position of trust to put excess pressure on the party. Undue influence can be presumed if the contract calls for explanation and is between parent/child, solicitor/client, guardian/ward, medical adviser/patient

Question 13

What is a misrepresentation and what does in render a contract?

Answer 13

A misrepresentation is a false statement of fact or law made by one party to another which induces the other party into a contract. This makes a contract voidable - can rescind the contract or seek damages.

Damages are not available for innnocent misrepresentation (but a court has discretion to award damages in lieu of recission)

Question 14

When is silence a misreprestation?

Answer 14

When a contract requires utmost good faith (eg life insurance), when partial disclosure would be misleading, when an earlier misrepresentation becomes untrue