Exclusion Clauses - Common Law

Question 1

What is an exclusion clause?

Answer 1

• Terms which exclude liability
• Set an upper limit for breaches in contract
• Take away peoples legal rights
• If the contract is broken and one party tries to rely on an exclusion clause to limit their legal responsibility, courts apply common law controls.
• Will only be applied if its properly incorporated

Question 2

What is the first way to incorporate an exclusion clause?

Answer 2

Whether the agreement was signed - will be bound
Case : L’Estrange v Graucob (claim failed as sign)

• If request for clarification on meaning of clause, verbal statement may override written clause
  Case : Curtis v Chemical cleaning and dyeing (claim successful due to verbal statement)

Question 3

What is the second way an exclusion clause can be incorporated?

Answer 3

Incorporation by notice
- Give notice to other party
- Must give other party the notice of the existing exclusion clause before they enter the contract
Case : Thornton v Shoe Lane Parking

• If a term is harsh it must be brought to attention to the attention of the other party otherwise it wont be incorporated
  Case : Nu Skin UK
• Terms cannot be incorporated into contract after acceptance unless
  1. New contract which changes original
  2. It is specified in original contract that there can be variation
  Case : Olley v Marlborough Court hotel
• Tickets may incorporate terms if it is reasonable to believe the back of ticket will be checked
  Case : Chappelton v Barry Urban District Council (reasonable person would have disregarded ticket as receipt and not have read the back)
  HOWEVER
  Terms will be incorporated if reasonable steps were taken to inform individual
  Case : Thompson v London, Midland and Scottish Railways (company made sure to inform customers of terms)

Question 4

What is the third way a term can be incorporated into a contract?

Answer 4

Incorporation by previous dealings between parties
- Must have been consistent
- Courts are reluctant to impose
Case : McCutcheon v David MacBrayne

Question 5

What is the fourth way an exclusion clause can be incorporated into a contract?

Answer 5

Contraproferentum Rule
- Applies when exclusion clause is unclear. When words are ambiguous courts will decide if D can rely on term.
- When there is doubt of meaning, words must be interpreted against person trying to claim
Case : White v John Warwick (ambiguous wording prevented claim)