incorporation of terms

Question 1

contract terms are considered what

Answer 1

to be unfair to one of the parties that the law will intervene to prevent an injustice. this often happen in relation to exemption clauses

Question 2

what is the limitation clause

Answer 2

this is a clause which specifies that liability for breach will be limited to a certain amount in damages.

Question 3

what is an exclusion clause

Answer 3

this is a clause which seeks to exclude all liability for certain breaches on contract.

Question 4

When looking at an exemption clause you need to approach it in the following order.

Answer 4

1 is the clause effective at common law
if yes
2 are there statutory provisions which reduce the effectiveness of the clauses

Question 5

what is the first way courts will regulate exemption clauses

Answer 5

1 they will ask whether the clause has been incorporated into the contract. It is up to the party relying on clauses to prove that it was.

Question 6

what is the second way courts will regulate exemption clauses

Answer 6

2 if the clause has been incorporated, they will ask whether the words cover the breach that has been alleged

Question 7

how can terms be incorporated

Answer 7

by signature
by reasonable notice
by course of previous dealing
third parties to the contract
statutory controls

Question 8

what is meant by incorporation by signature

Answer 8

When a party has signed a written agreement then they are bound by that agreement even if they have not read or understood its terms.

Question 9

what is the expectation of incorporation by signature

Answer 9

to this where the person seeking to rely on the clause, misled the other party about the meaning of the clause

Question 10

case link to by signature

Answer 10

L’Estrange v Graucob 1934 COA

Question 11

facts of L’Estrange v Graucob 1934 COA

Answer 11

C purchased a cig vending machine for use in her cafe. She signed an order form which stated in small print ‘any express or implied, condition, statement of warranty, statutory or other wider is expressly excluded’. The vending aching did not work and the claimant sought to reject it under the sale of goods act for not being of merchantable quality.

Question 12

held for L’Estrange v Graucob 1934 COA

Answer 12

in signing the order form she was bound by all the terms contained in the form irrespective of whether she had read the form or not. Consequently her claim was unsuccessful

Question 13

facts of Curtis v chemical cleaning 1951 COA

Answer 13

C took her wedding dress to the cleaners. She was asked to sign a form. She asked the assistant what she was signing and the assailant told her that it excluded liability for any damage to the beads. The form in fact contained a clause excluding all liability for any damages howsoever cause the dress was returned badly stained.

Question 14

held for Curtis v chemical cleaning 1951 COA

Answer 14

the assistant had misrepresented the effect of the clause and therefore could not rely on the clause in the form even though the claimant had signed it.

Question 15

what is meant by incorporation by reasonable notice

Answer 15

If separate written terms are presented at the time a contract is made then those terms only become part of the contract if the person suffering the exemption clause has reasonable expectations of them

Question 16

what will courts need to look for with reasonable notice before separation

Answer 16

Was the notice brought to the attention of the party at the time the contract was made?
Was the notice given in the document which a reasonable erosion would expect to contain contractual?
Is the term that I particularly unusual or onerous?

Question 17

case link to incorporation by reasonable notice

Answer 17

Olley v Marlborough court hotel 1949

Question 18

facts of Olley v Marlborough court hotel 1949

Answer 18

C booked into a hotel. The contract was made at the reception desk where there was no mention of an exclusion clause. In the hotel room on the back of the door a notice sought to exclude liability of the hotel proprietors for any lost, stolen or damaged property. C had her fur coat stolen

Question 19

held for Olley v Marlborough court hotel 1949

Answer 19

notice was ineffective. The contract had already been made by the time C had seen the notice. It did not therefore form the contract.

Question 20

what is meant by incorporation by course of previous dealing

Answer 20

If the parties have previously made contracts between them and those contracts included an exemption clause, the clause may also apply to the subsequent agreement even if the usual steps to incorporate it have not been taken. MUST be consistent course

Question 21

case link by course of previous dealing

Answer 21

Hollier v rambler motors 1972

Question 22

facts of Hollier v rambler motors 1972

Answer 22

C had used the services of D garage on 3-4 occasions over a five year period. Each time he had been asked to sign a doc excluding liability for any damage. On this occasion the contract was made over the phone and no reference to the exclusion clause was made. The garage damaged the car during the repair work and sought to invoke the exclusion clause through previous dealings.

Question 23

held for Hollier v rambler motors 1972

Answer 23

there was not a sufficient number or regularity of transaction to amount to a previous course of dealings capable of incorporating the exclusion clause. It was not reasonable to accept the claimant to remember the clause from one transaction to the next. Consequently the garage was liable to pay for the damage

Question 24

what is third parties of the contract

Answer 24

The doctrine of privity of contract means that a third party may not be able to rely on an exclusion

Question 25

case link for third parties to the contract

Answer 25

Scruttons v midland silicones 1962

Question 26

facts of Scruttons v midland silicones 1962

Answer 26

Rs were consignees of a bill of lading. The cargo was a drum of chemicals. The contract limited the carrier’s liability to £179 per package in the event of loss, damage or delay. The appellants were the stevedores responsible for unloading the cargo from the vessel. Their contract with the carrier specified that they should have ‘such protection as is afforded by the terms, conditions and exceptions of the bills of lading’. During the unloading process, they negligently dropped and damaged her drum, losing £593 worth of chemicals. Rs sued the appellants in tort for the loss. Appellants accepted liability for negligence

Question 27

held for Scruttons v midland silicones 1962

Answer 27

HOL held in favour of the Rs. on facts the carrier has not acted as the appellants’ agents when making the carriage contract. Therefore, there was no privity between the appellants and respondents

Question 28

what happens if the clauses are ambiguous

Answer 28

they will be interpreted in a way less favourable to the party relying on them (contra proferentem). This approach was taken in Hollier v Rambler motors

Question 29

where is statutory controls applied

Answer 29

This applied to most non-consumer contracts, DOES NOT apply to consumer contracts as they are covered by CRA 2015.

Question 30

what act links to statutory controls

Answer 30

the unfair contract terms act 1977

Question 31

what clauses which are effective in non-consumer contracts

Answer 31

s2(1) a person cannot exclude liability for death or personal injury caused by negligence s6(1) a person cannot exclude liability for breach of implied condition as to title in s12 SOGA 1977

Question 32

in s2(2)/ A clause what is stated with subject to a requirement of reasonableness in non-consumer contracts

Answer 32

a person cannot exclude or restrict their liability for negligence which does not cause death or resonance injury unless it is reasonable

Question 33

what is stated the B clause -subject to a requirement of reasonableness in non-consumer contracts

Answer 33

a person cannot liability for breach of s13, 14 or 15 of SOGA 1979 unless it is reasonable

Question 34

what is stated the C clause -subject to a requirement of reasonableness in non-consumer contracts

Answer 34

where one party is dealing on the other parties standard terms of business then any clause which tries to exclude or restrict liability for non-performance which is substantially different to what was agreed, will not be valid unless reasonable

Question 35

what is stated in s.11(5)

Answer 35

The party who relies on the clause must prove that it is reasonable

Question 36

case link to The party who relies on the clause must prove that it is reasonable-s.11(5)

Answer 36

warren v truprint 1986

Question 37

what is the clause warren v truprint 1986

Answer 37

a clause saying that photographic company only had to give a replacement film if it failed to develop and print photos was unreasonable when it lost a couple’s wedding photographs

Question 37

what are the three reasonableness tests

Answer 37

knowledge test exclusion clauses which involve breach of implied conditions. where the clause is a limitation clause the court will consider

Question 38

what the knowledge test

Answer 38

is the term reasonable in the light of what the parties knew when the contract was made

Question 39

case link to knowledge test

Answer 39

smith v Eric S bush 1980

Question 40

facts of smith v Eric S bush 1980

Answer 40

C obtained a mortgage with a bank for the purpose of purchasing a property The bank commissioned a report from D surveyor, C paid the bank for the cost of the report The report led to C purchasing a house which was later found to need expensive repair owing to subsidence.

Question 41

held smith v Eric S bush 1980.

Answer 41

D was liable to C in negligence The exclusion of liability clause was found to be void for unreasonableness pursuant to s11 Unfair Contract Terms Act 1977

Question 42

what will courts look at for exclusion clauses which involve breaches of implied conditions of sale of goods act 1979 and supply of goods and service

Answer 42

relative bargaining did the customer receive an inducement to agree to the term. did customer know the term existed and excluded. were the goods a special order for the customer. was it reasonable to expect that the conditions that the exemption clause relates to could be complied

Question 43

facts and clauses of Watford electronics v Sandersons CFL Ltd 2001

Answer 43

two businesses contracted on the D's standard terms. a negotiated by experienced businessmen of equal bargaining power

Question 43

case link to exclusion clauses which involve breaches of implied conditions of sale of goods act 1979 and supply of goods and service

Answer 43

Watford electronics v Sandersons CFL Ltd 2001

Question 44

what are the two parts to CRA 2015 and exclusion clauses

Answer 44

A). The resource which the D could expect to be available for meeting his liability if it should arise B) How fair it was practicable to take out insurance against the liability

Question 45

what section in under bars on exclusion clauses

Answer 45

s.31

Question 46

what is sated in s.31 - bars on exclusion clauses

Answer 46

provides that some exclusion clauses are barred altogether in consumer contracts for the sale of goods. If these terms are present in a contract then they will not be effective.

Question 46

what does s.65 of CRA 2015

Answer 46

provides that liability for death or PI resulting from negligence cannot be excluded in consumer contracts

Question 47

what section links to fairness of terms

Answer 47

s.65

Question 48

what is s.65 fairness of terms

Answer 48

provides that terms and notices in consumer contracts must be fair. If they are unfair then they are not binding on the consumer

Question 49

what happens if a term is unfair

Answer 49

if ‘contrary to the requirement of good faith, it causes a significant imbalance in the parties’ right and obligation to the detriment of the consumer’

Question 50

what does good faith mean with fairness of terms

Answer 50

means ‘fair and open dealing’ so that the trader should express terms clearly and legibly so that there are no unexpected traps. The trader should also not seek to take advantage of the consumer’s lower bargaining power or their inexperience or lack of knowledge

Question 51

what is meant by regulation CRA

Answer 51

There are various statutory provisions which prevent the effect of certain exclusion clauses. This section will examine and analyse two of the most relevant pieces of legislation. the consumer rights act 2015

Question 52

what is the unfair contract terms act 1977

Answer 52

UCTA is a piece of legislation which prevents the exclusion of liability in certain circumstances. It applies both to exclusions of contractual and tortious liability in contracts relating to (mostly) things done or to be done in the context of business liability.

Question 53

under s.1 UCTA how is business liability defined

Answer 53

as arising in things done or to be done in the ‘course of business’. Business is defined loosely in section 14 of include the normal meaning of commercial activity, but also that it includes professions, governments and local/public authorities

Question 54

what is dealing as a consumer if laibility will arise towards other business

Answer 54

Parties who deal as a consumer will not be subject to some the restrictions in UCTA

Question 55

facts of R&B custom brokers Co ltd v United Dominions trust ltd 1998

Answer 55

a shipping company purchased a car for the company's director use. When the car developed some issues, the shipping company sued for breach of contract. The question was asked of whether the shipping company was dealing in the course of business, or as a consumer when they purchased the car. As the car purchase was not an integral part of the shipping business, the court held they were acting as a consumer.

Question 56

held for R&B custom brokers Co ltd v United Dominions trust ltd 1998

Answer 56

Therefore, the test to apply is whether or not the contract forms an integral part if the business; if not, they will be dealing as a consumer

Question 57

what in s.2 what impacts the validity of exclusion clauses

Answer 57

negligence liability -under s2(1) cannot exclude liability fir death or personal injury caused by negligence

Question 58

what in s.3 what impacts the validity of exclusion clauses

Answer 58

contractual liability- this section imposes a reasonableness test where one party is bound by the others standard written terms of business.

Question 59

what the outcome of smith v eric S bush 1990

Answer 59

the court held that the exemption clause was unreasonable for the purpose of the unfair contract terms act 1977. It was of particular note that this was a low value property to be used as dwelling that it was common practice for purchasers to rely on valuations in making such decisions

Question 60

what is s.6 with implied terms

Answer 60

implied terms in contracts for the sale of goods and hire purchase. -the implied condition as to title and the description etc.. under sale of goods act 1979 and the supply of goods and services act 1982- cannot be excluded

Question 61

what is the s.11 the reasonable test

Answer 61

as whether or not the term is a fair and reconcile one to have included in the contract, in light of all circumstances known at the time of contracting. Therefore, any info that was discovered following the making of the contract would be irrelevant.

Question 62

what is stated under s.11(5)

Answer 62

rules that the burden of proving this reasonableness relies on the party attempting to use the excluding clause.

Question 63

what factors to assess reasonableness are as follows

Answer 63

Factors identified by legislation Factors identified by courts

Question 64

what does s.11(2) direct

Answer 64

s to schedule 2 of UCTA some guidelines which will be considered when assessing what is reasonable

Question 65

what are the guidelines for s.11(2) of UCTA

Answer 65

1)barraging positions of the parties 2)was agreement to the exemption clause as a result of inducement 3)could any condition for the enforcement of liability be complied with? 4)Were the goods made specifically at the request of the buyer? 5)Was the contracting party actually aware of the existence and extent of the term, irrespective of any rules of incorporation such as notice or signature

Question 66

what are the criteria s.11(4)- limitation clauses

Answer 66

1)The resources the defendant could expect to be available for meeting their liability 2) How far it was open to the defendant to cover themselves by insurance against any successful claim

Question 67

held for George mitchell Ltd v Finney lock seeds Ltd 1983

Answer 67

held that the exclusion did extend to the seeds sold to and used by C and that to claim other wide would tortoise the language of the contract. However, it was also observed that on the facts this was an unfair term which could be struck down by the UCTA.

Question 68

what was the issues for the case George mitchell Ltd v Finney lock seeds Ltd 1983

Answer 68

whether the excluding clause could extend to the seeds used by the C, bearing in mind that they were unfit to do the job they were sold to do and secondly, whether extending the effect of the exclusion clause in this way would be reasonable under s.2(2) of UCTA 1977.