Revision Book

Question 1

How can an exclusion clause be valid at common law?

Answer 1

It must satisfy three tests:
It must be a term if the contract (the clause must be incorporated into it)
It must cover the damage that was caused
It must be reasonable

Question 2

How are exclusion clauses incorporated into contractual terms?

Answer 2

By signature
By notice
On a ticket
Previous dealings

Question 3

How is incorporation by signature effective?

Answer 3

If the document containing the contractual terms is signed, regardless of whether they have been read or understood (L’Estrange). It is only invalidated if there is a misrepresentation as to the effect of the clause (Curtis - wedding dress).

Question 4

How do you incorporate exclusion clauses by notice?

Answer 4

It must be introduced before or at the time of the contract (Olley - fur coat in hotel) and the party subject to the clause must be made aware of its existence before or at the time the contract was formed (Parker - not made aware, luggage stolen, ticket).

Question 5

In order to bring an exclusion clause to the attention of the party to whom it effects reasonable steps must be taken. What is reasonable?

Answer 5

It is a question of objective fact (Thompson - actual notice is not required, just reasonable).

Question 6

How do you include exclusion clauses on a ticket?

Answer 6

The clause will only be incorporated if it is on a document which might reasonably be considered to contain contractual terms (Chapelton - deck chair) and it has been brought to the attention of the other party (Thornton - cat park).

Question 7

How do you incorporate exclusion clauses by reference to another document?

Answer 7

If reference is made to another document containing an exemption clause before the contract is made, the claimants attention must still be drawn to the clause itself (Dilon - cruise ship sank).

Question 8

How do you include exclusion clauses by previous course of dealings?

Answer 8

This is an exception to the need for sufficient notice if there have been previous dealings with the parties (J Spurling - orange juice, dealt with for years and therefore bound by the terms) as long as it was consistent, if not they can not rely on the clause (McCutcheon - car on ferry, risk sometimes signed).

Question 9

If a clause has been incorporated into the contract, it is then necessary to show that the clause covers the breach that has occurred. How is this done?

Answer 9

The contract as a whole will be considered, meaning it is possible that an exclusion clause may still fail. We must look at the contra proferentem rule and whether it was a fundamental breach.

Question 10

What is the contra preferentem rule?

Answer 10

Any ambiguity in the wording of a clause will be construed against the party trying to rely on it (Houghton - excess load in car meaning weight not passengers).

Question 11

What if an exclusion clause attempts to exclude liability in negligence?

Answer 11

It must reach a very high standard of clarity and precision to be held to cover the breach that has occurred (Hollier - car set on fire by faulty electrics in garage. It should have stated it would not be liable for its own negligence, the clause was too general).

Question 12

What is a fundamental breach in exclusion clauses?

Answer 12

Where the clause does cover the breach, the courts do not allow an exclusion clause to protect a party from liability of a fundamental breach (Photo Production - lit fire in factory while on patrol, clear and unambiguous therefore could rely on it).

Question 13

How does legislation control the operation of exclusion clauses?

Answer 13

Through the unfair contract terms act 1977 which limits what can be avoided for breach of oho tract, negligence or other breach of duty.

Question 14

Who does UCTA apply to?

Answer 14

Dealings done in the course of a business not private transactions (s1(3)).

Question 15

What are the exceptions to UCTA not applying to private transactions?

Answer 15

Implied terms in sale of goods and hire purchase contracts (UCTA, s6)
Implied terms in supply of goods and service contracts (UCTA, s7)
Misrepresentation (UCTA, s8)

Question 16

What type of contract does UCTA not apply to?

Answer 16

Contract of insurance
Contract for land
Contracts for patents, trademarks etc (schedule 1)

Question 17

What does UCTA say you cannot exclude with regards to negligence?

Answer 17

Death or personal injury resulting from negligence (s2(1) UCTA).

Question 18

Can you limit liability for loss or damage, other than death or personal injury, under UCTA?

Answer 18

S2(2) UCTA says you can or you can limit liability as long as the term satisfies the reasonable test.

Question 19

Can one party exclude or restrict liability for breach of contract under UCTA?

Answer 19

S3(2)(a) UCTA says they cannot if one party is dealing as a consumer or on the others standard terms of business unless it satisfies the reasonableness test.

Question 20

What is the definition of a consumer under UCTA?

Answer 20

S12(1) UCTA says to be a consumer:
One party must not make the contract in the course of business
The other party must make the contract in the course of business
The goods to which the contract relates (sale of goods or hire purchase) must be supplied for private use or consumption

Question 21

What does s12(3) of UCTA say?

Answer 21

That the burden falls on the party seeking to rely on the exclusion clause to disprove that the contract is a consumer contract.

Question 22

What does s6(2) UCTA say?

Answer 22

That provided the claimant is dealing as a consumer, liability cannot be excluded for:
Conformity with description
Quality or fitness
Conformity with sample

Question 23

What does s6(3) of UCTA say?

Answer 23

That is a person is not dealing as a consumer liability can be excluded for breach of implied terms if they satisfy the reasonableness test.

Question 24

What does s7 UCTA deal with?

Answer 24

The supply of goods and services, implied terms cannot be excluded if you’re dealing as a consumer. If not you must satisfy the reasonableness test.

Question 25

Where can we find the test fo reasonableness in UCTA and what sections does it apply to?

Answer 25

Section 11. It applies to:
S2(2) - exclusion for liability of loss other than death or personal injury
S3 - liability for breach of contract, one party is consumer or dealing on others standard form contract
S4 - liability for indemnity
S6(3) - breaches of implied conditions in the sale of goods act 1979
S7(3) - breaches of implied conditions in the supply of goods and services act 1982
S8 - relating to exclusions for misrepresentation

Question 26

What is the key point of s11 UCTA?

Answer 26

That it must have been reasonable in all the circumstances when the contract was made s11(1).

Question 27

What does s11(4) of UCTA specify?

Answer 27

For clauses which attempt to limit liability, the court must consider the resources the D has to meet that liability and if he could have protected himself with insurance.

Question 28

What does s11(5) deal with?

Answer 28

The burden of proof is on the person seeking to rely on the exemption clause to prove that it is reasonable in all of the circumstances.

Question 29

What is the criteria that should be considered when applying the reasonableness test?

Answer 29

Schedule 2 UCTA says:
The strength of the bargaining positions of parties
Whether customer received an inducement to agree to the term
Whether the customer knew or ought reasonably to have known of the existence of the term
Where the term excludes/restricts liability if a condition was not complied with, was it reasonable at the time of the contract
Whether the goods were manufactured to the special order of the customer

Question 30

How are exclusion clauses controlled?

Answer 30

Through a body of common law and statute in the Unfair Contract Terms Act 1977.