Introduction Flashcards
What are exemption clauses?
They are clauses that can exclude or limit liability.
Exclusion clauses are used to exempt parties from liability for their breach of contract or other legal duty.
Limitation clause are used when party seeks to limit liability (not exclude)
The law requires criteria to be present for those clauses to be valid.
The legal rules are:
1. Incorporation
2. Interpretation (wording must cover the loss)
3. Statutory controls
What must a party show to rely on an exclusion clause?
- Term is incorporated as a term in the contract
- Wording of the clause covered loss
- Clause complied with statutory controls (act as filters for allowed / not allowed clauses)
If the above are all present - the clause is enforceable.
What Act has statutory controls been amended by?
CRA 2015
This specifically relates to consumer-trader contracts only.
What does incorporation of term into a contract mean?
Must be able to show that the clause is a term and that it is incorporated.
Pattie must know of the clause or given sufficient notice of it at or before entering contract.
Clause is incorporated if contract is signed, if notice has been given or by previous course of dealings. This rule applies to all terms - not just exemption clauses.
How does a signature affect the incorporation of term into a contract?
The signature shows that the person has read it.
CASE: L’Estrange v Grawob
Claimant brought a cigarette vending machine and didn’t read the terms.
Held, in the absence of fraud and misrepresentation, bound by agreement.
Defendant protected by exclusion clause.
S7 Electronic Communications Act 2000 - provides that electronic signature have the same effect as written signatures
How do notices affect the incorporation of term into a contract?
If parties have not signed, but have read the contract - held to have been given notice of the terms and therefore, the terms are incorporated.
Reasonable steps must have been taken to draw attention at or before contract is entered.
What are the five factors that effect incorporation of terms?
- Nature of the document
- Degree of notice
- Onerousness of clause
- Time notice was given
- Previous course of dealing
What is the rule that courts follow to interpret terms in contract?
The Contra Proferentem Rule
It is a common-law rule that a exemption clause is construed against party seeking to rely on it.
Any ambiguity is interpreted in a manner least favourable to a person placing reliance on it.
Introduction of statutory controls means clauses are dealt with correctly at statutory level - with less reliance on this rule.
S69 CRA 2015 expressly reserves the Contra Proferentem Rule in favour of consumers when constructing an exemption clause.
What is an important aspect of The Contra Proferentem Rule?
3.1
In order to exclude negligence from liability - very clear words are required.
If clause does not contain the word “negligence” then legal issues can arise if not clear or ambiguous
CASE: White v John Warwick & Co
Claimant hired bike from defendant and was injured.
Agreement stated - “nothing in the agreement shall render owners liable for PI”
Held term was ambiguous and that clause excluded liability only for breach and not tort.
What is the common reason that exemption clauses fail?
If the extent or existence of the exemption clause is misrepresented.
CASE: Curtis v Chemical Cleaning
Held that the defendant could not rely on exemption clause which was “any damage whatsoever” as the defendant had told the claimant that it was j if t damage to the beads.
