Exclusion Clauses

Question 1

What are the main requirements for an exclusion clause to be effective?

Answer 1

(1) Must have been incorporated into the contract
(2) Must have been drafted to exclude the loss that has been suffered
(3) Must not be prohibited by statute
- Unfair Contract Terms Act
- CRA

Question 1

What is an exclusion clause?

Answer 1

A clause designed to exclude or limit one party’s liability

Question 2

Ways to incorporate exclusion clauses into contracts

Answer 2

(1) By signature

(2) By notice
- Notice must be given at the appropriate time, not after the contract has already been entered into

(3) By custom through previous dealings

Question 3

Unfair Contract Terms Act limitations on exclusion clauses

Answer 3

Excluding liability for death or PI caused by negligence is AUTOMATICALLY VOID

Excluding liability for any other loss cause by negligence is void unless reasonable

Cannot exclude liability for legal title

Can only exclude liability for compliance with description, quality, or fitness for purpose if reasonable

Cannot exclude liability in standard terms if:
(1) it restricts liability for breach of contract
(2) it reserves the right to perform obligations differently
(3) it renders no contractual performance at all, unless reasonable.

Question 4

CRA limitations on excluding liability

Answer 4

Cannot limit liability for:
- Death of PI caused by negligence
- Breaching the conditions of legal title, description, quality, and fitness for purpose

Terms must be transparent, legible, and fair

Terms do not need to meet the fairness test if they specify the main subject matter of the contract and are transparent.