Exclusion clauses

Question 1

How did the Courts invalidate ECs before UCTA?

Answer 1

Through indirect means (i.e. offer and acceptance, Thornton v Shoe Lane parking) or through their restrictive rules of interpretation

Question 2

For a party to rely on EC, what are the 3 steps to succeed?

Answer 2

1. Prove that EC is incorporated into the contract
2. EC, as a matter of construction, can exclude liability for loss the claimant has suffered - INTERPRETATION
3. UCTA: Claimant must prove that EC falls under scope of UCTA. If he does so, the party seeking to rely on EC must prove that EC passes requirements of reasonableness.

Question 3

Contra proferentem principle to exclude EC

Answer 3

An ambiguous clause will be used against the party relying on the clause, i.e. if you rely on an ambiguously worded EC, it is not valid.
This actually can be applied unreasonably, if courts go out of their way to find ambiguity

Question 4

Contra proferentem with negligence - what is the case

Answer 4

Canada Steamship Lines v R provides the principles governing exclusion of liability vis-a-vis negligence

If the EC expressly covers negligence —> No liability
If not —> Is the only realistic loss likely to be suffered due to negligence -> If Yes, No liability. HOWEVER, Hollier v Rambler Motors (AMC) warned against relying on this.

Otherwise, liability will be found.

Flaw of this framework is that it assumes proferens seeking to use EC do not intend to use general words to exclude liability for negligence - there is no logical basis, but arguably protects consumers, unless the intention of both parties is proven to exclude ANY CLAIM

Question 5

Fundamental Breach - Rule of law or rule of construction?

Answer 5

If the contract is breached, is terminated, does the EC still work? Essentially, the more serious the breach, the more explicit and clear the EC has to be constructed to exempt/limit liability.

Denning suggested that it was a rule of law, that fundamental breach means EC is invalidated in Suisse Atlantique, and this was rejected eventually. AFTER ALL, IT WOULD BE AGAINST THE “FREEDOM TO CONTRACT”

In Photo Production Ltd v Securicor Transport, it was confirmed that this is not a rule of law, but a rule of construction.

SG has endorsed this view in Sun Technologies v Federal Express (and the Parker case)

Question 6

What is the view of Limitation Clauses vs ECs?

Answer 6

Limitation clauses are not as restrictively interpreted as ECs.

Ailsa Craig Fishing Co v Malvern Fishing Co
Rationale that it is less improbable that a party intended to allow limitation than exclusion.
But its a arbitrary categorisation, because limitation can be extreme enough to be considered exclusion.
Rather than drawing such distinctions, the court should just look out for the same standard to ensure all such clauses are reasonable.

Anyway, its presumptively vapid, and only UCTA can invalidate it.

Question 7

Emjay Enterprises Pte Ltd v Skylift Consolidator (Pte) Ltd

How does this case answer Singapore’s stance to fundamental breach + LCs

Answer 7

P already obtained interlocutory judgment against D for breach of contract.
D attempts to introduce an LC to limit the damages they have to pay. Court rejected this, ECs and LCs relate to determine liability, and assessing damages is a by-product of what is the extent of the liability.

Court affirmed Photo Production v Securicor Transport - Fundamental Breach does not destroy efficacy of EC/LC - court will have to construct if EC has effect by considering the contract and context as a whole.

Singapore Courts confirmed that the introduction of limitation clauses will be viewed less stringently than ECs when it relates to assessing damages, but it will only be accepted as pleading when determining the issue of liability - the stage of assessment of damages is a bit too late.