Exclusion Clauses Flashcards
What are exclusion clauses?
- A term in contract that prevents one party one being liable for a breach of contract
- They attempt to limit liability
What do exclusion clauses try to limit liability from?
- Restrict the value of any claim to the purchase price of goods
- Exclude claims for a defect to 14 days from the date of contract
- Attempt to exclude the Rights of Third Parties Act
Are exclusion clauses fair?
- They can seem unfair as one party is in a better position
- They attempt to control exclusion clauses through common law and statutory law
- This limits exclusion clauses so one party is not too powerful
- It is put in place by the person with more bargaining power
How are exclusion clauses considered?
- The whole contract will be considered when interpreting the exclusion clause combined with the reasonable person test
What are the three areas for common law controls?
- The court will consider whether the exclusion clause is a term in the contract
1. Whether the agreement is signed
2. Whether any notice with the term is incorporated in the contract
3. Whether the term is incorporated as a result of the previous dealings
What does it mean by whether the agreement is signed?
- If a party has signed a written agreement which the exclusion clause was agreed in, it is presumed they are bound by that agreement
- Seen in L’Estrange v Graucob
- If one party raises a query, and then the defendant misrepresents the clause which induces the claimant to sign the contract, the term won’t apply
- Seen in Curtis v Chemical Cleaning and Dyeing
What does it mean by whether any notice with the term in it is incorporated by reasonable notice?
- Must be brought to the attention before the contract was made. This is usually in unwritten contracts
- You cannot introduce new terms to a contract after acceptance unless the original contract allows variation in terms
- The term must be made clear when the contract is made
- Seen in Olley v Marlborough Court Hotel
What does it mean by whether the term is incorporated as a result of previous dealings?
- If the parties have dealt consistently and on the same terms before then we can imply knowledge of the past dealings to this one
- Hollier v Rambler Motors
Can third parties rely on the terms of a contract?
- Third parties cannot usually rely on terms of a contract as seen in Scruttons v Midland Silicones
- The Rights of Third Parties Act 1999 now allows the third party to enforce any terms which exclude or limit liability
What is the Contra Proferentem Rule?
- Where there is doubt against the meanining of a term in a contract, the words will be construed against the person who put them in the contract
- The term will be used against the person who wishes to rely on it because they are the one who have broken their contract and evade liability
- Will be used when there is more than one interpretation for the clause
- Not often used in commercial contracts as they bargain on equal terms
What is statutory control of exclusion clauses?
What is the statutory controls in a business to consumer contract? What are the two acts?
- The consumer has no bargaining power which is why there are two provisions through acts
- The Unfair Contract Terms Act 1977
- The Consumer Rights Act 2015
What is the Unfair Contract Terms Act 1977?
What is the Consumer Rights Act 2015?
- A fairness test for enforceability of terms and consumer choices
- The main subject matter that set the price are only exempt from the test of fairness if they are transparent and prominent
There is a list that contains potentially unfair clauses in consumer contracts
What are the three sections that sets out the exclusion clauses in the CRA2015?
- S31
- S57
- S65
What is Section 31?
- Prohibits a term excluding liability for S9, S10, S11, S14 and S15
S9 - Satisfactory quality
S10 - Fit for particular purpose
S11 - Goods to be as described
S14 - Goods match a model
S15 -
What is Section 57?
- Prohibits liability for services S49, S50,S51 and S52
S49 - Reasonable care and skill
S50 - Trader being binding
S51 - Reasonable price
S52 - Reasonable time
What is Section 65?
- Excludes causes for death or personal injury resulting from negligence
What is Section 62?
- All consumer contract terms and notices must be fair
- Unfair terms are those who put the consumer at a disadvantage
