Exemption Clauses

Question 1

3 ways to incorporate exemption clauses

Answer 1

Signature
Notice
Course of Dealings

Question 2

L’Estrange v Graucob

Answer 2

Clause will be incorporated by signature if:

• clause is legible and signed by claimant; and
• the document is a contractual document

Question 3

If a clause is misrepresented, it will be invalid

Answer 3

Curtis v Chemical Cleaning

Question 4

To be incorporated by notice, the document containing the clause must be contractual in nature

Answer 4

Chapelton v Barry Urban

Question 5

To be incorporated by notice, there must be either actual notice or constructive notice

Answer 5

Parker v South Eastern Railway

Question 6

Factors to consider for whether steps to give customer notice were reasonable

Answer 6

position of clause
prominence of clause
type of clause

Question 7

Onerous clauses must be explicitly drawn to attention

Answer 7

Example of a red hand point to clause in red ink in Thornton v Shoe Lane Parking

Question 8

Onerous clause printed on foot of deliver note is not reasonable

Answer 8

Interfoto Picture v Stiletto

Question 9

Reasonable steps to incorporate notice must occur before contract finalised (or at time fo finalisation)

Answer 9

Olley v Marlborough Court

Question 10

A course of dealings can provide notice after a contract is finalised, if consistent in both frequency and terms

Answer 10

Spurling J v Bradshaw

Question 11

Kendall v Lillico

Answer 11

Course of dealings 3/4 times per month over 3 years amounted to a course of dealings

Question 12

Hollier v Rambler Motors

Answer 12

3/4 times in 5 years did NOT amount to course of dealings

Question 13

McCutcheon v MacBrayne

Answer 13

If signing of contract is not consistent, neither is course of dealings

Question 14

Contra proferentem rule

Answer 14

If clause is ambiguous or unclear, the courts will interpret it against the party relying on it
(Houghton v Trafalgar Insurance)

Question 15

Exemption clause of negligence

Canada Steamship Lines v The King

Answer 15

Clause must clearly relate to negligence, and not be so wide as to cover other liabilities

Question 16

If the exemption clause is clearly worded, very serious breaches can be covered

Answer 16

Photo Productions v Securicor Transport

Question 17

UCTA 1997

Answer 17

Unfair Contract Terms Act 1997

Question 18

To what does UCTA apply to?

Answer 18

• breach of SGA/SGSA
• negligence and negligent breach of contract
• breaches of express terms

All for things done in the course of business

Question 19

If exclusion of liability for death or personal injury caused by negligence

Answer 19

Voids the clause

s.2(1) UCTA

Question 20

If exclusion of liability for loss or damage to property caused by negligence

Answer 20

Subjects clause to reasonableness test

S.2(2) UCTA

Question 21

If exclusion for breach of express term

Answer 21

Subjects clause to reasonable test

S.3 UCTA

Question 22

If breach of:

s. 12 SGA
s. 2 SGSA

Answer 22

Voids clause

s. 6(1) UCTA
s. 7(3A) UCTA

Question 23

If breach of:

ss. 13-15 SGA
ss. 3-4 SGSA

Answer 23

Subjects clause to reasonable test

Question 24

The Reasonable Test

It must be fair and reasonable to include the exemption having regard to circumstances that:

Answer 24

• were known
• ought reasonably to have been known; or
• were within the contemplation of the parties when the contract was made

Question 25

s.11 UCTA 1997

Answer 25

Reasonableness Test

Question 26

Statutory guidelines for reasonableness

Answer 26

Sch 2 UCTA 1997

s.11(4) UCTA (for limitation clauses)

Question 27

Smith v Eric Bush

Answer 27

Factors to consider for reasonableness:

• equal bargaining power?
• reasonably practicable to obtain advice from alternative source?
• Difficulty of task

Question 28

St Albans CDC v International Computers Ltd

Answer 28

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?

Question 29

Standard industry terms are generally reasonable

Answer 29

Schenkers v Overland Shoes

Question 30

When deciding if a clause is reasonable, clause must be considered as a whole

Answer 30

Stewart Gill v Horation Myer

Question 31

If term has separate parts, their reasonableness should be considered separately

Answer 31

Watford Electronics v Sanderson

Question 32

A clause that excludes liability for misrepresentation could be read to include exclusion for fraudulent misrepresentation

Answer 32

Thomas Witter v TBP

Question 33

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

Answer 33

Adler v Dickson

Question 34

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

Answer 34

Contract (Rights of Third Parties) Act 1999 (s.1(1))

Question 35

Exception to Third Parties Rule

Negligence

Answer 35

A third party may claim in the tort of negligence if they can establish duty, breach and causation