Exclusion Clauses

Question 1

Explain what governs exclusion clauses briefly

Answer 1

Common law is first assessed to see if the exclusion clause is valid
It will then have to be assessed by statute

Question 2

What are the two test under common law?

Answer 2

Haw the clause been properly incorporated?

Does it cover the loss caused?

Question 3

What arises under how the term has been incorporated?

Answer 3

General rule: the term must be bought the the attention of the other party before/at the time of contracting
Bound by terms even if didn’t read/understand them
If misrepresentation was involved the clause is ineffective
Clauses can be incorporated through previous dealings
Clauses can be incorporated on a ticket

Question 4

What case is related to the general rule?

Answer 4

Parker v South Eastern Railway

Question 5

Facts of Parker v South Eastern Railway

Answer 5

C’s luggage was stolen from train storage
On the pack of his storage ticket there was a clause saying they were not liable for loss more than £10
Railway claimed they were not liable because of this

Question 6

Outcome of Parker v South Eastern Railway

Answer 6

Court held they were liable because they needed to be more efficient in bringing it to C’s attention
Cannot be aware of a clause if you didn’t know about it

Question 7

What case is related to being bound by a clause even if you didn’t read/understand it

Answer 7

L’Estrange v Graucob

Question 8

Facts of L’Estrange v Graucob

Answer 8

C bought a ciggerette machine which turned out to be faulty

She had not read the contract which contained an exclusion clause prohibiting her from a warranty

Question 9

Outcome of L’Estrange v Graucob

Answer 9

Her claim was unsuccessful because she was bound by the exclusion clause

Question 10

What case is relevant to having previous dealings?

Answer 10

Spurling v Bradshaw

Question 11

Facts of Spurling v Bradshaw

Answer 11

D was contracted to store things
On one occasion C delivered barrels of orange juice
A few days later D received a document which acknowledged the receipt - if claimed an exempt clause from loss or damage from negligence
C collected barrels and they were empty and refused to pay
C sued

Question 12

Outcome of Spurling v Bradshaw

Answer 12

They tried to claim because they were not made aware of it the exclusion clause could not apply
Court said because they have dealt for many years and this clause has applied in other contracts of there’s then they were aware and had to pay

Question 13

How do you determine if the clause covers the loss?

Answer 13

With the contra proferentum rule

Question 14

What is the contra proferentum rule?

Answer 14

It establishes if there is any ambiguity in the clause then it will favour the claimant

Question 15

What case is relevant to the contra proferentum rule?

Answer 15

Houghton v Trafalgar insurance co

Question 16

Facts of Houghton v Trafalgar insurance co

Answer 16

C’s motor insurance policy provided he could not rely on the insurance if the vehicle carried an ‘excess load’.
C had an accident while driving with 6 people in a 5 person car

Question 17

Outcome of Houghton v Trafalgar insurance co

Answer 17

Courts applied the contra proferentum rule and said that excess load could mean weight or people. His claim was successful