Exclusion clauses Flashcards
Introduction to Exclusion Clauses
- Exclusion, exemption and limitation clauses
- Usually found in cormercial or consumer agreements
- Courts sometimes intervene to invalidate or weaken exclusion clauses
- Statutes may also mitigate the effect of exclusion clauses
- e.g. Sales of Goods & Consumer Protection Acts
Exclusion clauses must satisfy two requirements:
- Exclusion clause must be incorporated into a contract, i.e. be a contractual term
- Exclusion clause must be clear in its meaning and wide enough to protect the party relying on it
Agreement Signed
Case authority
L Estrange v F Graucob Ltd.
Incorporation as cafe owner signed agreement
Agreement not signed (exclusion clause)
- Reasonable notice required where document not signed
Parker v South Eastern Railway (1877)
Ratio: The plaintiff took a parcel to a railway company depot for delivery, and received a ticket on which were printed conditions including a disclaimer. On the front of the ticket were printed the words ‘see back’. The jury was asked only if they concluded that he knew of the condition.
Held: A re-trial was ordered on the company’s appeal. The judge’s direction was incorrect. He would not be bound if he did not know there was writing on the ticket, but will be if he knows there is writing and that it contains conditions, or even if he knows there is writing, but not that it contains conditions, provided the jury was satisfied that reasonable notice had been given that the ticket did contain conditions.
Agreement not signed
No reasonable notice where terms are onerous
Case authority
Interfoto Picture Library v Stilletto
Held:
The term was not incorporated into the contract. Where a term is particularly onerous the person seeking to rely on the term must take greater measures to bring it to the attention of the other party.
Agreement not signed
- The more onerous the clause, the better notice of it needs to be given + contract already formed
Case authority
Thornton v Shoe Lane Parking Ltd
Parking case where the notice was given after contact was made
Documents mistakenly signed
- Signing something believing it to be something different from what it is
- Could be regarded as unilateral mistake but courts have treated it as separate category
Non est factum - “it is not my deed”
Case authorities
Saunders v Anglia Building Society (Gallie v Lee)
Held: The House of Lords found against Mrs Gallie. The document was not radically different to that which she believed it to be in that she believed that she was relinquishing her rights to the property in any event. Furthermore the House of Lords stated that the plea of non est factum should not be too widely applied and reserved for those who through no fault of their own are unable to read the document eg blind, illiterate or incapacitated through age.
Foster v Mackinnon
Howatson v Webb
Clarity
Wording must be clear and wide enough:
Case authority
Andrew Bros v Singer & Co
- New cars
Boyack & McKenzie Ltd v Lock Joint Ltd
- Suspension of construction work
Incorporation by previous dealings
Case authorities & rationale
- *Spurling Ltd. v Bradshaw**
- Storage of orange juice
- > Prior course of dealings must have been consisten
- > Prior course of dealings infers that the parties intended for the exclusion clause to be incorporated
- *Hollier v Rambler Motors**
- Fire at garage
- *McCutcheon v David MacBrayne Ltd**
- Ferry sunk
Incorporation of exclusion clauise - agreement not signed
Case authorities
- *Olley v Marlborough Court Ltd.**
- Rationale: Reasonable notice to be given at or before time of contracting
- *Chapelton v Barry Urban District Council**
- Rationale: Sales receipt not capable of incorporating terms
- *O’Brien v MGN Ltd**
- Rationale: Reasonable notice of newspaper scratch card terms
- *Thomas v London Midland and Scottish Railway**
- Rationale: Inability to read is not a an excuse because the reasonable person is expected to be able to read
Summary of exclusion clauses
Exclusion clauses must be incorporated and must be clear
- Incorporation of exclusion clauses can be done by signing, by giving reasonable notice, or by prior dealings
- Meaning of exclusion clauses must be clear, ambigous clauses are interpreted according to the contra proferentem rule
