Exclusion Clauses [Contract Law]

Question 1

What is an Exclusion Clause?

Answer 1

A term which limits liability or excludes liability for one party breaching the contract.

Question 2

What is the first common law exception? (SA)

Answer 2

If there is a signed agreement, then this is binding on all parties, whether it has been read or not (L’Estrange v Graucob).

However, if the C has queried the meaning of an exclusion clause, then they may use the advice given to them instead (Curtis v Chemical Cleaning and Dyeing)

Question 3

What is the second common law rule? (I)

Answer 3

Considers whether the term was incorporated into the contract. It must have been brought to the attention of all parties before signing the contract (Thorton v Shoe Lane Parking).

Question 4

What is the third common law rule? (PD)

Answer 4

Considers whether the parties had regularly used the same type of agreement and so the EC was included by previous dealings. It must be more than twice and the courts would need significant proof (Spurling v Bradshaw).

Question 5

What are the TWO rules which consider whether the EC relates to the case?

Answer 5

1. Contra Proferentem
   If the contract contains unclear or ambiguous wording, then this is seen as favouring one party (Houghton v Trafalgar Insurance).
2. Main Purpose Rule:
   The Exclusion Clause must cover the main aims of the contract (Glynn v Margeston)

Question 6

The FIRST test under UCTA 1977

Answer 6

Under s11(1), was the insertion of the term reasonable according to what the parties knew at the time of making the contract (Smith v Eric S. Bush).

Question 7

The SECOND test under UCTA 1977

Answer 7

Under s11(2), this considers whether both parties had similar bargaining power at the time the contract was made, whether one party had the power to reject the agreement and whether the customer knew the term and what it covered (Watford Electronics v Sanderson)

Question 8

The THIRD test under UCTA

Answer 8

Under s11(4), the courts will consider what recourses D has to cover the cost of being found liable and whether it is possible for D’s insurance cover the cost (George Mitchell v Finney Lock Seeds).

Question 9

What are two things AUTOMATICALLY banned from being ECs under UCTA 1977?

Answer 9

D cannot exclude liability for

• death or serious injury caused by negligence, under s2(1)
• loss or damage caused by negligence, under s2(2)

Question 10

What is the general test for Fairness under CRA 2015?

Answer 10

The Fairness Test states that an unfair term will not be binding on the consumer. An unfair term is defined as, under s62, ‘it causes significant imbalance in the parties’ rights and obligations under the contract to the detriment of the consumer’.

Question 11

What are some banned Exclusion Clauses relating to the ‘sale of goods’ under CRA?

Answer 11

Set out under s31, liability cannot be excluded for goods:

• being of satisfactory quality (s9)
• being fit for the purpose described (s10)
• being as described (s11)

Question 12

What are some banned Exclusion Clauses relating to the ‘supply of services’ under the CRA?

Answer 12

Under s57, D cannot exclude liability for services being supplied:

• with reasonable care and skill (s49)
• at a reasonable price (s51)
• within a reasonable time (s52)

Question 13

Which section bans ECs for death or serious injury stemming from Negligence under the CRA?

Answer 13

s65