Exemption Clauses Flashcards
3 ways to incorporate exemption clauses
Signature
Notice
Course of Dealings
L’Estrange v Graucob
Clause will be incorporated by signature if:
- clause is legible and signed by claimant; and
- the document is a contractual document
If a clause is misrepresented, it will be invalid
Curtis v Chemical Cleaning
To be incorporated by notice, the document containing the clause must be contractual in nature
Chapelton v Barry Urban
To be incorporated by notice, there must be either actual notice or constructive notice
Parker v South Eastern Railway
Factors to consider for whether steps to give customer notice were reasonable
position of clause
prominence of clause
type of clause
Onerous clauses must be explicitly drawn to attention
Example of a red hand point to clause in red ink in Thornton v Shoe Lane Parking
Onerous clause printed on foot of deliver note is not reasonable
Interfoto Picture v Stiletto
Reasonable steps to incorporate notice must occur before contract finalised (or at time fo finalisation)
Olley v Marlborough Court
A course of dealings can provide notice after a contract is finalised, if consistent in both frequency and terms
Spurling J v Bradshaw
Kendall v Lillico
Course of dealings 3/4 times per month over 3 years amounted to a course of dealings
Hollier v Rambler Motors
3/4 times in 5 years did NOT amount to course of dealings
McCutcheon v MacBrayne
If signing of contract is not consistent, neither is course of dealings
Contra proferentem rule
If clause is ambiguous or unclear, the courts will interpret it against the party relying on it
(Houghton v Trafalgar Insurance)
Exemption clause of negligence
Canada Steamship Lines v The King
Clause must clearly relate to negligence, and not be so wide as to cover other liabilities
If the exemption clause is clearly worded, very serious breaches can be covered
Photo Productions v Securicor Transport
UCTA 1997
Unfair Contract Terms Act 1997
To what does UCTA apply to?
- breach of SGA/SGSA
- negligence and negligent breach of contract
- breaches of express terms
All for things done in the course of business
If exclusion of liability for death or personal injury caused by negligence
Voids the clause
s.2(1) UCTA
If exclusion of liability for loss or damage to property caused by negligence
Subjects clause to reasonableness test
S.2(2) UCTA
If exclusion for breach of express term
Subjects clause to reasonable test
S.3 UCTA
If breach of:
s. 12 SGA
s. 2 SGSA
Voids clause
s. 6(1) UCTA
s. 7(3A) UCTA
If breach of:
ss. 13-15 SGA
ss. 3-4 SGSA
Subjects clause to reasonable test
The Reasonable Test
It must be fair and reasonable to include the exemption having regard to circumstances that:
- were known
- ought reasonably to have been known; or
- were within the contemplation of the parties when the contract was made
s.11 UCTA 1997
Reasonableness Test
Statutory guidelines for reasonableness
Sch 2 UCTA 1997
s.11(4) UCTA (for limitation clauses)
Smith v Eric Bush
Factors to consider for reasonableness:
- equal bargaining power?
- reasonably practicable to obtain advice from alternative source?
- Difficulty of task
St Albans CDC v International Computers Ltd
Factors to consider for limitation clause reasonableness:
- experienced commercial bodies are free to make their own bargain
- was there awareness of limitation clause at time of contract?
- is type of clause common for industry in questions?
- Does D have ample resources for the liability?
Standard industry terms are generally reasonable
Schenkers v Overland Shoes
When deciding if a clause is reasonable, clause must be considered as a whole
Stewart Gill v Horation Myer
If term has separate parts, their reasonableness should be considered separately
Watford Electronics v Sanderson
A clause that excludes liability for misrepresentation could be read to include exclusion for fraudulent misrepresentation
Thomas Witter v TBP
General Rule:
An exemption clause cannot protect a third party as the privity of contract rule provides that only a party to a contract can rely on the clause
Adler v Dickson
Exception to Third Parties Rule
Third party can acquire rights if contract expressly provides he may acquire a benefit; or
term purports to confer a benefit on him
Contract (Rights of Third Parties) Act 1999 (s.1(1))
Exception to Third Parties Rule
Negligence
A third party may claim in the tort of negligence if they can establish duty, breach and causation
