Points of Law: Exemption clauses

Question 1

Exclusion clause:

Limitation clause:

Answer 1

A term of the contract that excludes a party from liability for what would otherwise be a breach of contract.

A term that simply limits the liability.

Question 2

L’Estrange v Graucob (1934)

Answer 2

Generally if a party signs a document, then s/he is bound by the terms in that document even if s/he did not read it.

Question 3

3 Ways to incorporate an exemption clause into a contract.

Answer 3

-By signature
-By notice
-By a consistent and frequent course of dealings

Question 4

Curtis v Chemical Cleaning & Dyeing Co (1951)

Answer 4

If an exemption clause is misrepresented, then it can no longer be relied upon.

Question 5

Thompson v LMS Railway (1930)

Answer 5

Only reasonable notice needs to be given, not actual.

Question 6

Spurling v Bradshaw (1956)

Answer 6

The more onerous or unusual a contract is, the more notice is needed. (RED HAND)

Question 7

Interfoto Picture Library v Stiletto Visual Programmes (1988)

Answer 7

Contractual terms, especially those that are onerous and unexpected, must be reasonable to be enforceable.

Question 8

Chepelton v Barry Urban District Council (1940)

Answer 8

Exemption clauses need to be on a contractual document, not a receipt. (could also be used for timing)

Question 9

Olley v Marlborough Court Hotel (1949)

Answer 9

For the notice to be effective it must be given before or at the time the contract its made, otherwise it will be too late.

Question 10

Spurling v Bradshaw (1956)

Answer 10

If you would have been aware of the term from the previous contract it can form part of the new contract.

Question 11

Hollier v Rambler Motors (1972)

Answer 11

There must be frequent and consistent dealings prior to the current contract for the clause to be valid.

Question 12

Contra proferentem rule

Answer 12

Where there is doubt about the meaning of the contract, the words will be construed against the person who is seeking to rely on them.

Question 13

Andrews v Singer (1934)

Answer 13

Any ambiguity in the effect of the clause would be interpreted against the party seeking to rely upon it.

Question 14

Ailsa Craig Fishing v Malvern Fishing (1983)

Answer 14

Courts are less hostile to limitation clauses than they are to exemption clauses, and therefore make less effort to interpret them in ways which strain the language of the clause in order to achieve a measure of justice.

Question 15

Photo Productions v Securicor (1980)

Answer 15

Where the parties are negotiating at arm-length, and have set out who would bear the risks, the courts should be unwilling to interfere.

Question 16

Unfair Contract Terms Act 1977 (UCTA)

Answer 16

Introduced to fill gaps in the judicial control mechanism for exemption clauses. Statutory control of the clauses. Now applies to B2B.

Question 17

George Mitchell v Finney Lock Seeds (1983)

Answer 17

An exemption clause is more reasonable if the person relying on it is less able to insure against loss or damage.

Question 18

Woodman v Photo Trade Processing Ltd. (1981)

Answer 18

Reasonableness - The bargaining strengths of the parties and whether the buyer could’ve used an alternative supply.