Exemption clauses

Question 1

What is an exemption clause

Answer 1

A clause in a contract or a term which appears to exclude or restrict liability or a legal duty which would otherwise arise

Question 2

What are the most frequently encountered clauses?

Answer 2

Those which seek to exclude liability for a breach of contract.
Exclusion of liability for negligence.
Limits liability to a specified sum

Question 3

What is an indemnity clause?

Answer 3

A clause under which one contracting party promises to indemnify or reimburse the other for any liability incurred by him in the performance of the contract

Question 4

What are the hurdles for including an exclusion clause in a contract?

Answer 4

• The exclusion clause must be properly incorporated into the contract.
• The exclusion clause covers the loss that has arisen
• No other rule of law invalidates the exclusion clause

Question 5

Interfoto v Stiletto

Answer 5

Where the term is onerous, reasonable care must be taken to bring it to the other party’s attention

The condition was unreasonable and extortionate and had not been sufficiently brought to the defendant’s attention. It did not form part of the contract

Question 6

What is the contract proferentum rule?

Answer 6

Any ambiguity will be resolved against the one in reliance of it

Question 7

What was the rule in canada steamship v r?

Answer 7

1. A clause containing language that expressly exempts him from his negligence must be given effect to this clause.
   - Words ‘loss whatsoever occasioned’ is not an express reference
2. Whether the words are wide enough to cover the negligence of the party seeking to rely on the clause
3. Does the clause cover some liability other than negligence?

Question 8

What are the common law exceptions to exemption clauses?

Answer 8

A party can’t rely on an exclusion clause of which he has misrepresented to the other party (Curtis v Chemical Cleaning & Dyeing)
An exclusion clause can be overridden by an express inconsistent undertaking (couchman v hill)

Question 9

Andrew Brothers v Singer

Answer 9

The court held that the “new Singer car” was not an implied term but rather an express one; the defendants had therefore breached the contract by not delivering a “new Singer car” and the exemption clause could not be relied upon.

Question 10

To whom does UCTA apply?

Answer 10

contracts concluded between parties acting in the course of a business

Question 11

Phillips Products v Hyland and Hamstead Plant Hire

Answer 11

Reliance on UCTA- unreasonableness means an exclusion clause may be rendered ineffective

Question 12

Chester Grosvenor Hotel v Alfred McAlpine Management