Exemption/ Exclusion/ Limitation Clauses

Question 1

Definition of Exemption/ Exclusion/ Limitation Clauses:

Answer 1

Exemption/Exclusion Clauses: Specific type of term in a contract which intend to ABSOLVE a party of liability in the event of a breach of contract or commitment of a tort.

Limitation Clauses: Specific type of term in a contract which intend to LIMIT the remedies available to the other party in the event of breach of contract or commitment of tort.

Question 2

The courts are of the view that this particular type of term commonly featured in various types of contract is INHERENTLY UNFAIR and has MINIMIZED THEIR EFFECT in two different ways:

Answer 2

1) Analyzing the INCORPORATION of the clause

&

2) Trying to INTERPRET the clause.

Question 3

1) INCORPORATION OF THE CLAUSE:

Answer 3

1) When was the contract concluded?

• Olley v. Malborough (hotel)
• Thornton v. Shoe Lane Parking (parking lot)

Question 4

1) INCORPORATION OF THE CLAUSE:

Answer 4

2) Was sufficient notice given?

• Parker v. SE Railway
• Early v. Great Southern Railway

Question 5

1) INCORPORATION OF THE CLAUSE:

Answer 5

3) Special Case of Incorporation By a Course of Dealing:

• Spurling v. Bradshaw
• Hollier v. Rambler Motors (there was not a consistent and regular course of dealing between the parties).

Question 6

2) INTERPRETATION OF A CLAUSE:

Answer 6

a) Contra Proferentem Rule:
- In circumstances where the exemption/exclusion clause is ambiguous/equivocal and therefore capable of more than one interpretation, such clause will be CONSTRUED AGAINST THE PARTY SEEKING TO RELY ON IT.

• How do you defeat such rule? Ensure the clause is well-drafted and precise/as clear as possible!

—> Andrews Brothers v. Singer (I’M WORKING LATE CAUSE I’M A SINGER)

Question 7

2) INTERPRETATION OF A CLAUSE:

Answer 7

a) Contra Proferentem Rule and Negligence:

• In order to determine whether proferens can rely on an exclusion clause to be protected from an action in negligence, a three-stage test was established in the case of:
• Canada Steamship Line Ltd v. R

a) Language which expressly exempts the proferens from liability;

b) If the words used were wide enough to cover negligence;

c) If they were indeed wide enough to cover negligence, could they also potentially cover any other “head of damage” other than negligence?

Question 8

2) INTERPRETATION OF A CLAUSE:

Answer 8

c) Fundamental Breach:

• The status of this principle is currently uncertain in Irish Law.
• Clayton Love v. B & I Steampacket (supreme court adopted a RULE OF LAW which determines that an exemption clause cannot be extended to a fundamental breach of contract)