Exclusion clauses and limitations

Question 1

What is an exclusion clause

Answer 1

A term in a contract that prevents one party from being liable for a breach of contract

Question 2

What is a limitation clause

Answer 2

a term in a contract that sets an upper limit on liability for breach of contract

Question 3

What must the courts first do when deciding whether the term is incorporated within the contract

Answer 3

• whether the agreement is signed
• whether any notice with the term in it is incorporated in the contract
• whether the term os incorporated as a result of previous dealings of the parties

Question 4

Whether the agreement is signed

Answer 4

L’estange v Graucob - C had signed the contract and therefore could not claim even though the cigarette machine didn’t work, she had signed the contract and was therefore bound to the contract even though she hadn’t read it

Question 5

oral ‘written’ agreement signed

Answer 5

Curtis v Chemical cleaning = C was told to sign a contract relating to the fact that the dry cleaners are not to be held responsible if her dress was damaged. However they orally explained that the contract was only relating to the beads coming off. When returned the dress had a large stain; the cleaners could NOT rely on the exclusion clause because of the oral submission regarding damage to the beads.

Question 6

Whether any notice with the term in it is incorporated in the contract.

Answer 6

Incorporation can only happen if at the time the contract was made the unsigned document was Brought to the attention of the person suffering the exclusion clause
Any attempt to introduce a new term after acceptance will fail unless there is a new contract varying the original one or if the original contract allows for variation

Question 7

Olley v Marlborough

Answer 7

Cs left key at hotel reception when they went out, key was then taken and someone stole C’s goods. hotel claimed they were not liable because of an exclusion clause.
THIS DIDNT STAND as there was not notice inside Cs bedroom and they could not have known this before the contract was formed

Question 8

Chapelton v Barry UDC

Answer 8

Cs hired deck chairs at beach, sign posted outlined the timings and price for hiring the deck chairs. On the back of receipt after hiring stated ‘ the council is not liable for damage caused’. Cs didn’t look at the receipt as they assumed it was only to be used for proof of purchase later on. The terms were NOT incorporated within the contract.

Question 9

Thompson v LMS railway

Answer 9

C was illiterate. C went on railway excursion and was given a ticket stated ‘for conditions see back’. These conditions excluded liability for injury. She was injured.
however the clause was incorporated as there is only the expectation to take reasonable steps to bring attention to the clause for the reasonable person

Question 10

Thornton v Shoe lane parking

Answer 10

C was injured at car park. Notice at the entrance stating that parking was at the owners risk. On the ticket given ‘this ticket is issued subject to the conditions of issue as displayed on the premises. Notices inside the car park then listed the conditions of the contract including the exclusion clauses covering both damage and personal injury
The term were NOT incorporated as they hadn’t done enough to give awareness to the terms

Question 11

Whether the term is incorporated as a result of previous dealings of the parties

Answer 11

Assumption that if previous dealings have taken place then the courts will allow the terms to be incorporated - Hollier v Rambler
however they are reluctant to do this as seen in the case of
McCutcheon v David = C often used ferry and was sometimes asked to sign document including exclusions. Relative used the ferry was not asked to sign anything but was given a receipt with exclusion clauses. DIDNT read it, ferry sank, car ruined. NO incorporated terms

Question 12

The effect of exclusion clauses on third parties to the contract

Answer 12

The contract (rights of third parties) act 1999 allows for third parties to rely on exclusion clauses providing the other requirements of the act are met and the act itself is not excluded.

Question 13

The contra proferentem rule

Answer 13

where there is doubt about the meaning of a term in a contract the words will be construed against the person who put them forward
Transocean drilling

Question 14

Statutory controls over exclusion clauses

Answer 14

• the unfair contract terms act 1977 - applied to exclusions for liability in tort as well as contractual agreements
• the consumer rights act 2015- applies to contracts between traders and consumers

Question 15

The unfair contract terms act

Answer 15

non consumer contracts

a test for reasonableness to be applied to the exclusion clauses

Question 16

Exclusions and limitation may be void by the act (unfair contract terms act) if

Answer 16

• Under S2(1) a person cannot exclude liability for death or personal injury caused by negligence
• S2(2) in loss or damage a person cannot exclude or restrict his liability for negligence except in so far as it is reasonable to. do so
• S6(1) cannot exclude agains the sale of goods act and s7 of the supply of goods and services act)

Question 17

Exclusions depending for their validity on a test of reasonableness

Answer 17

Section 3 imposes reasonableness test 
Section 11 (5) of the unfair contract terms act= requires the party who inserts the clause in the contract, and who seeks to rely on it, to show that it is reasonable in all the circumstances 
Warren v Trueprint

Question 18

Warren v True print

Answer 18

‘only responsible for replacing film in the event of failed development or printing’
true print were unable to show that this term was reasonable when they lost a couples wedding photos

Question 19

Bars on exclusion clauses CRA 2015

Answer 19

S31 - prevents exclusion clauses for S9, S10, S11, S14, S15, S16, S17
S57- prohibits a term excluding or limiting liability for the supply of services under the follow act
S49, S50, S51, S52

Question 20

General fairness of terms

Answer 20

S62 requirement for all consumer contract terms to be fair. Act defines unfair as those which put the consumer at a disadvantage by limiting their rights however it is subject to circumstance