Exclusion clauses Flashcards
what is an exclusion clause
it is a term in a contract that prevents one party’s being liable for a breach of contract
may try to limit liability by attempting to estrict the value of any claim to the purchase proce of the goods or exclude any claims for a defect to 14 days from teh contract.
many contracts attempt to exclude the right of third parties act they seem unfair as one party is in a Better position than the other.
therefore the courts have come up with ways to limit exclusion clauses.
The courts try to control exclusion clauses through common law and statutory law too.
usually put in place by the person with more bargaining power - normally person setting the contract
the whole contract will be considered when interpreting the exclusion clause combined with reasonable person test.
thinking about justice - why do you think the courts need to be careful with exclusion clauses.
Common law controls
. the court will have to consider whether the exclusion clause is a term of the contracrt
they do this by considering 3 areas
what 3 areas to the courts consider when deciding if the exclusion clause is a term of the contract
KEY ELEMENTS
1) Whether the agreement is signed
2) Whether any notice with the term in it is incorporated in the contract
3) whether the term is incorporated as a result of the previous dealings of the parties
Key element number 1
whether the agreement is signed
. if a party has signed a written agreement. It is presumed that they are bound by that agreement - presumed to be valid
. if the exclusion clause was therefore in that agreement and you signed it then it would be included.
key cases for element 1
L’Estrange V Graucob 1934
Curtis v Chemical Cleaning and Dyeing Co 1951
L’Estrange V Graucob 1934
LEGAL PRINCIPLE - if agreement is signed then exclusion clause will be included.
Curtis v Chemical Cleaning and Dyeing Co 1951
Legal principle - misrepresentation of exclusion term wont apply
2 key element
whether any notice with the term in is incorporated in the contract by reasonable notice
. This typically involves unwritten contracts
. incorporations of the term can only apply if it was brough to the attention before the contract was made
. very subjective to what the courts agree on it being reasonable notice
. you cannot introduce new terms to a contract after acceptace (unless the original contract allows for variation in terms e.g. mobile phone price variations)
. e.g. if yoy park your car and the notice says ‘ this car park does not take responsibility for any damage to your car’ this is an exclusion clause for an unwritten contract and will be incorparated as it is given with raesonable notice before having to pay/enter into the conract
issues arise when the terms aren’t made clear when the contract is made
for example when D says they gave reasonable notice and v argues they didn’t
- can also be where the notice is placed
Olley v marlborough court hotel
case authority for what is reasonable notice. in the case it was established it as not reasonable notice as it was after he entered the contract and not before.
key cases for element 2 - whether any notice with the term is incorporated in the contract by a reasonable notice
Olley v marlborough court hotel
3) key element
Whether teh term is incorporated as a result of previous dealings
if the parties have
.dealt consistently - issues arise to what is consistantly - have tehy had consistnatdealings with eachother
.dealt on the same terms before - cannot alter them
.then we can imly knoledge of teh past dealings to this one
key case for element 3 - whether the term is incorporated as a result of previous dealings
hollier v rambler motos 1972
Thompson v LMS Railway 1930
thornton v shoe lane parking Ltd 1971
Chapelton v Barry Urban District Council
hollier v rambler motos 1972
authority - 3-4 times in the past years was not consistent enough
Chapelton v Barry Urban District Council
Example of unreasonable notice
- given on the back of a ticket after contract was made there should of ben a distinction between notice and a receipt.
thornton v shoe lane parking Ltd 1971
not reasonable notice given
after acceptance terms where shown
exclusion clause and third parties
third parties cant really rely on the terms of a contract
the contracts ( rights of third parties) act 1999 now permits the third party to enforce anyterms which would exclude/limit liability - under s(2) or (4) they can now use exclusions caluases aswell.
Thompson v LMS Railway 1930
Reasonable notice given
drew attention to exclusion clause
for conditions see back’ conditions were also printed in teh company’s timetable
Scruttons v midland sillicones
the claimant was the owner of goods hwich were shipped by a carrier.
contracted limited the liability of the carrier for damage to teh goods of £500. carrier then contracted with a third party, teh defendant, to unload the goods and caused damage more the 3500 as the defednat wanst privy to teh contract the exclusion cluase of £500 didint apply to him and the calimant could sue for more
held - don’t typically permit the third party to enforce terms which would exclude/limit liability
Contra Proferentem Rule
justice
This can come up in a justice question
doesn’t just apply to exclusion clauses but usually only use it in that case
the term will be used against the person who wishes to rely on it because they are teh ones who have clearly broke their contract and are trying to evade liability
only used when one party has more bargaining power
it is used when there is more that one interpretation for the clause e.g. a literal menaing and the purposive approach. The person seeking to rely on it will opt for the broad measning and the ither perosn will rely on the narrow meaning
this principle now has little application to commercial contracts where the parties are bargaining on equal tems - ee vs vodaphone cannot use conra proferentum
what does Contra Proferentem mean
where there is doubt about the meaning of a term in a contract, teh words will be constructed against the person who put them in teh contract - if the wording is not clear courts will award the claimant
key case for contra proferetem
Transoceanon Drilling V Providence Resources 2016
Transoceanon Drilling V Providence Resources 2016
held - contra proferentem can only be used if the term is both one sided and ambiguous.
