EXCLUSION CLAUSES

Question 1

What is an exclusion clause? (1)

Answer 1

a term in a contract that prevents one party being liable for a breach of contract.

Question 2

what is meant by contra proferentem? (1)

Answer 2

where there is doubt about the meaning of a term in a contract, the words will be construed against against the person who put them in the contract.

Question 3

why does the law not like exclusion clauses? (1)

Answer 3

They are usually used by the stronger party against the weaker party who has little choice but to agree.

Question 4

how do we interpret these terms? (2)

Answer 4

When a dispute arises because terms have not been considered thee terms are interpreted by consideration. The contract is looked at as a whole rather than the individual term in isolation to establish the intentions of the parties.

Question 5

what case is used when we look at the interpretation of exclusion clauses? (1)

Answer 5

Glynn v Margetson (1893) - Lord Halsbury

Question 6

what approach is taken to exclusion clauses? (1)

Answer 6

uses a commercial, common sense approach - allows common sense in business when the words are unclear and ambigious.

Question 7

what must we look at when interpreting exclusion clauses? (2)

Answer 7

-common law
-statutory law

Question 8

what are the common law controls? (3)

Answer 8

-by signature
-by reasonable notice
-previous course of dealing

Question 9

what is meant by incorporation by signature? (2)

Answer 9

if a contract has been signed at the time of making the contract its contents become terms of the contract whether they have been read and understood or not.

Question 10

what case can be used for incorporation of exclusion clauses by signature? (1)

Answer 10

L’Estrange v Graucob

Question 11

when does the rule of incorporation by signature not apply? (1)

Answer 11

does not apply where there has been a misrepresentation of the document.

Question 12

what case can be used for none application due to misinterpretation? (1)

Answer 12

Curtis v chemical cleaning

Question 13

what is meant by incorporation due to reasonable notice? (1)

Answer 13

If a party wishes to rely on the exclusion clause reasonable notice must be given about the clause, not after the contract has been agreed.

Question 14

what cases can be used for incorporation by reasonable notice? (2)

Answer 14

Parker v south eastern railways
Thompson v LMS railway

Question 15

at what time must reasonable notice be given? (1)

Answer 15

the law is clear, a term is only incorporated into a contract if notice is given before or at the time of contracting

Question 16

what case can be used for timing of reasonable notice? (1)

Answer 16

Olley v Malborough

Question 17

what is meant by previous course of dealing? (1)

Answer 17

if two parties have previously made a serious of contracts between them and those contracted contained an exemption clause then future contracts may be deemed to contain the exemption clause.

Question 18

what cases can be used for incorporation due to previous course of dealing? (2)

Answer 18

Hollier v Rambler
McCutcheon v David MacBryne ltd (1964)

Question 19

what effect do exclusion clauses have on third parties? (1)

Answer 19

the doctrine of privity prevents third parties being involved in a contract so an exclusion clause may not offer an protection to any parties other than those in the contract.

Question 20

how do we resolve these difficulties involved in exclusion clauses and third parties? (1)

Answer 20

inclusion of statutory law - S1 (6) of the contract (rights of third parties) act 1999

Question 21

what rule covers ambiguous and ominous clauses? (2)

Answer 21

the rule of Contra proferentem, the rule asserts that where there is ominous or ambiguous terms, it should be interpreted against the person who introduced it and seeks to rely on it as they are the person who breached the contract and are looking to avoid liability by replying on it.

Question 22

what are the two possible meanings of a term? (2)

Answer 22

• narrow - to reduce the scope of the exclusion clause
• broad - to leave the scope of the exclusion clause broad

Question 23

what does the consumer rights act do? (3)

Answer 23

consolidates previous exclusion clause regulation which was present in the unfair contract terms act 1977 and the unfair terms in consumer contract regulations 1999.

Question 24

where is the unfair contract terms act now used? (1)

Answer 24

is now only applicable to business to business agreements.

Question 25

what does the consumer rights act 2015 include? (3)

Answer 25

• a fairness test
  -a provision that the main subject matter of the contract or term that set the price are only exempt from the test of fairness if they are transparent and prominent
  -a grey list

Question 26

what does S62 of the CRA 2015 state? (1)

Answer 26

states that any term must be fair - a term is unfair is, contrary to the requirement of good faith it causes a significant imbalance in the parties rights and obligations under the contract to the detriment of the consumer.

Question 27

what does S64 of the CRA 2015 state? (1)

Answer 27

states that the requirement of fairness does not apply to the price as long as the price is transparent in the contract.

Question 28

what does S65 of the CRA 2015 state? (1)

Answer 28

a trader cannot restrict or exclude liability for death or personal injury due to negligence

Question 29

what does schedule 2 of the CRA 2015 state? (1)

Answer 29

schedule 2 contains a list of terms which may be regarded as unfair.

Question 30

what does S11 of schedule 2 of the CRA 2015 state? (1)

Answer 30

a term which has the object or effect of enabling the trader to alter the terms of the contract unliterally without a valid reason which is specified in the contract.

Question 31

what are the three tests of reasonableness? (3)

Answer 31

covered by;
-S11 (1) UCTA
-S11 (2) UTCA
-S11 (4) UTCA

Question 32

What is s11 (1) UTCA 1977? (1)

Answer 32

concerns exclusion clauses in general, the test is whether the insertion of the term in the contract is reasonable in the light of what was known to the parties at the time the contract was made.

Question 33

what case cover s11 (1) UTCA 1977? (1)

Answer 33

Smith v Eric S Bush (1990)

Question 34

what is s11 (2) UTCA 1977? (1)

Answer 34

covers exclusion clauses involving breaches of the implied conditions in the sale of goods act 1979 and supply of goods and service act 1982 in business to business dealings.

Question 35

what case covers s11 (2) UTCA 1977? (1)

Answer 35

Watford electronics ltd Sanderson CFL ltd (2001)

Question 36

what is S11 (4) UTCA 1977? (1)

Answer 36

Specifically relates to limitation clauses.

Question 37

what are the criteria for s11 (4) UTCA 1977? (2)

Answer 37

-The resources which the defendant could expect to be available for meeting his or her liability should it arise#
-how far it was open to the defendant to cover him or herself by insurance against any successful claim.

Question 38

what is a limitation clause? (1)

Answer 38

a term in a contract that sets an upper limit on liability for breach of contract

Question 39

what case covers s11 (4) UTCA 1977? (1)

Answer 39

George Mitchell ltd v Finney Lock seeds ltd (1983)

Question 40

what happened in the case of L’Estrange v Graucob and when was it? (4)

Answer 40

L’Estrange bought a vending machine which including a contract with an exclusion clause which excluded all implied conditions and warranties. The machine did not work properly and L’Estrange relied on the implied term that it was fit for purpose, she was bound by the exclusion clause in the contract even though she had not read it. (1934)

Question 41

what happened in the case of Curtis v Chemical cleaning and dyeing co ltd and when was it? (4)

Answer 41

Mrs Curtis took her wedding dress to be cleaned and signed a contract which stated that the cleaners would be exempt from liability for any damage ‘howsoever arising’. she asked what she was signing and was told that the cleaners would not accept liability for beads or sequins attached to the dress. When the dress was returned it had a stain on it, the cleaners could not rely on the exclusion clause as the oral assurances made to Curtis only excluded liability for sequins. (1951)

Question 42

what happened in the case of Olley v Melborough court hotel and when was it? (4)

Answer 42

Claiment booked into a hotel at the front desk, this was when the contract was formed. They went out, leaving the key at the desk when they came back someone had taken their belongings. hotel claimed they were not liable because of the exclusion clause however the clause was not incorporated due to the notice inside Olley’s bedroom in the hotel and could not have been known about when they made the contract. (1949)

Question 43

what happened in the case of Chapelton v Barry Urban District council and when was it? (4)

Answer 43

Chapelton hired deckchairs on the beach and received tickets from the beach attendant on paying the hire charge for the chairs. Next to the deck chairs was the price and time limit but did not refer any exclusion clauses but on the back of the chair it stated that the council would not be liable for any accident or injury from the hire of the chair. Chapelton did not read the ticket as it was a receipt so he would not be asked to pay against throughout the day, he fell off the chair injuring him. (1940)

Question 44

what happened in the case of Thompson v LMS railway and when was it? (3)

Answer 44

Thompson was illiterate and could not read, she went on a railway excursion and was given a ticket with exclusion clauses on the back. these conditions excluded liability for any injury, she was injured on the journey and claimed for damages. (1930)

Question 45

what happened in the case of Hollier v Rambler Motors and when was it? (5)

Answer 45

Hollier called rambler and spoke to the manager, he said he wanted some repair work on his car, the manager said that the defendants could do nothing about it in the moment but if the pantiff would have it towed they would attend to defects and put them in order. Hollier agreed, those were the terms of the agreement expressed over the phone. It was taken to the garage which set alight, substantial damage was down the car. Hollier had been to this garage multiple times before on which he signed an invoice claiming no liability due to damage by fire. Court decided that the terms of this invoice would be implied but there was insufficient frequency in making the contract o justify the conclusion. (1972)

Question 46

what happened in the case of McCutcheon v David MacBrayne ltd and when was it? (4)

Answer 46

Claimant often used defendants ferries, sometimes he was asked to sign a risk note including an exclusion clause, one of his relatives took his car to the ferry , the relative received a receipt which referred notices containing conditions displayed on the ferry company premises. He did not read the receipt and was not asked to sign it. The ferry sank and the car was destroyed. There was no consistent course of action that allowed it to assume that the claimant knew of the exclusion clause was always present and so it was not incorporated into the contract. (1964)

Question 47

what cases can be used for contra proferentem? (3)

Answer 47

Transocean drilling UK ltd v providence resources plc (2016)
Persimmon homes lts v ove arup and partners ltd (2017)
Oliver Nobahar-Cookson v the hut group (2016)

Question 48

what happened in the case of Transocean drilling UK ltd v providence resources plc and when was it? (4)

Answer 48

involved a claim for loss of use by providence of oil exploration rigs off the coast by Ireland. It is normally assumed that exclusion clauses should be construed contra proferentem, however the agreement in this case was a sophisticated agreement which was drawn up for parties of equal bargaining power. The exclusion clause benefited both parties and was part of a scheme for allocating losses between parties. Court stated contra proferentem principle is an approach to be used where the term is both one sided and ambiguous. (2016)

Question 49

what happened in the case of Persimmon homes lts v ove arup and partners ltd and when was it? (4)

Answer 49

Ove were a firm of engineers engaged by homes which was part of a consortium to provide services in relation to the development in South Wales. Consortium considered the quantity of asbestos contaminating the site was more than expected from ove’s report. COA decided that the meaning of the clauses was clear and unambiguous and should be given effect so the contra proferentem rule was not relevant. (2017)

Question 50

what happened in the case of Oliver Nobahar-Cookson v the hut group and when was it? (3)

Answer 50

The claimant company bough the defendant company. Defendant gave undertakings about many matters. The contract provided that any claim for breach of those undertakings must be served on the defendant as soon as reasonably practicable and ‘after becoming aware of the matter’

Question 51

what cases can be used for statutory controls of exclusion clauses? (4)

Answer 51

Warren v Truprint ltd (1986)
Smith v Eric S Bush (1990)
Watford electronics ltd v Sanderson CFL ltd (2001)
George Mitchell ltd v Finney Lock seeds ltd (1983)

Question 52

what happened in the case of Warren v Truprint ltd and when was it? (4)

Answer 52

involved the development and printing of photographs, contract contained a limitation clause where the defendants were responsible only for a replacement film in the event of failure to develop and print the photographs. Truprint was unable to show that this clause was reasonable when it lost a couples silver wedding phots/ (1986)

Question 53

what happened in the case of Smith v Eric S Bush and when was it? (4)

Answer 53

Surveyors negligently carries out a paid-for variation on a building and a defect was missed which resulted in loss to the purchaser. The surveyors and the mortgage application contained clauses excluding liability for the accuracy of the valuation report. The inclusion of the exclusion clause was not reasonable. (1990)

Question 54

what happened in the case of Watford electronics ltd v Sanderson CFL ltd and when was it? (4)

Answer 54

The claimant bought software from the defendant, the system failed to perform in the defendants standard terms there was a clause limiting any liability to the price of goods supplied. The court said that it was a reasonable term since the parties were of equal bargaining power and the limitation clause was subject to negotiation when the contract was made. (2001)

Question 55

what happened in the case of George Mitchell ltd v Finney Lock seeds ltd and when was it? (4)

Answer 55

The claimant ordered winter cabbage from the defendant for a set price. The seed did not match the description and produced plants that were unfit for sale. The entire crop was lost worth more than 10x the original price paid. the contract limited liability to replacement of the goods or a refund in price. The court stated that the price was not reasonable. (1983)

Question 56

what sections of the consumer rights act 2015 cover exclusion clauses? (3)

Answer 56

section 31, section 57 and section 65

Question 57

what does s35 of the consumer rights act 2015 state? (1)

Answer 57

prohibits a term excluding or limiting liability including for the following sections of the act with respect to the sale of goods;
-s9 (goods to be of satisfactory quality)
-s10 (goods to be fit for particular purpose)
-s11 (goods to be as described)
-s14 (goods to match a model seen or examined)
-s25 (installation as part of conformity of the goods with the contract)

Question 58

what does s57 of the consumer rights act 2015 state? (1)

Answer 58

prohibits a term excluding or limiting liability for the supply of services under the following sections of the act;
-s49 (service to be performed with reasonable care and skill)
-s50 (information about the trader or service to be binding)
-s51 (reasonable price)
-s52 (reasonable time)