Terms

Question 1

What is the difference between a mere puff, a representation, and a term? Are these mutually exclusive?

Answer 1

Mere puff: an exaggerated/promotional statement which a reasonable person wouldn’t read literally.

Representation: facts not belief. Statement made at time of contracting Which says certain facts are true and INDUCES the formation of the contract. Potentially legally binding.

Term: a promissory statement of fact, intended to be legally binding, which forms part of the contract. Legally binding.

Note a term can be a representation at the SAME TIME. So would be two separate actions: breach of contract and misrep.

Question 2

Which case should you always start with when distinguishing terms from representations?
What should you, in general, look at to determine whether or not something is a term or a representation?

Answer 2

Heilbut, Symons and Co
Basic test= intention with which statement was made. Did they intend for it to be part of the contract?
Timing is key. If made during negotiations it will be a term unless the other party can demonstrate that it is unreasonable for him to be bound by it.

Must look at the “totality of the evidence” Lord Holt in Oscar Chess.

Question 3

What are the 5 things to take into account during an objective judgement of whether or not a statement is a term or a representation?

Answer 3

TISWA
Timing
Importance of the statement
Skill - special skill or knowledge
Writing
Assumption of responsibility

Question 4

Case on importance of statement?

Answer 4

Bannerman v White
Use a BUT FOR test. But for the statement would the contract have been concluded? No? Term.
Look at the emphasis placed on the statement

Here they provided indemnity (assurance) so was a term since part of the contract.

Question 5

Two cases on timing of the statement?

Answer 5

Route master timing to get to the Inntrepreneur pub on time

Routledge v McKay
If at the time of contracting it is likely to be a term.
If any delay then more likely to be a representation.

Inntrepreneur pub co v East Crown
Also an authority on the timing point.

Question 6

Two cases on writing?

Answer 6

Has the statement been reduced to writing?
Yes - term - Inntrepreneur Pub Co v East Crown
No - could be either - Birch v Paramount Estates

Question 7

What are the two cases on special skill or knowledge?

Answer 7

Skilled Dick and infoless Oscar - not every Tom, Dick and Harry

Dick Bentley
If a statement maker had special skill, knowledge or access to info compared with the other party, the statement is likely to be a term
Not Lord Denning’s finest hour - he was assessing conduct and not the parties’ intentions! Said car dealer was in a position to find out the true history of the car. Was a warranty here since dealer had special skill.
Criticism: court should be looking to see if contract present,Minot assessing D’s behaviour.

Oscar Chess
If party to whom the statement is made has special skills or knowledge or info then the statement is likely to be a representation.
Lord Holt said have to look at totality of evidence to see if a term or a rep.

Question 8

In Dick Bentley and Oscar Chess how would you criticise Lord Denning’s approach?

Answer 8

He was confusing what a representation is - equating it with honest belief.
This is not correct. A representation is a statement of fact which induces a contract. Nothing to do with D’s belief!

Question 9

What is the authority on assumption of responsibility? The general rule?

Answer 9

Schawel v Reade
Where a vendor agrees the quality of the item this may constitute a term if the guarantee discourages the buyer from performing further check

Schawellll it’s schwalrriighttt

Question 10

Exceptions to the Schawel v Reade principle?

Answer 10

Ecay! For the love of Godfrey check the Tanqueray gin!

Ecay v Godfrey
Where vendor encourages buyer to perform checks

Hopkins v Tanqueray
Where the vendor not authorised to make the guarantee then representation and not a term.

Question 11

So what is the difference between a negative stipulation not incorporated vs a positive stipulation not incorporated?

Answer 11

Negative (e.g. An exclusion clause) - will have no legal effect
Positive - could still take effect as a representation (can’t be a term if not incorporated)

Question 12

Where you have a TERM what must you next distinguish between?

Answer 12

Whether it is express or implied.

If the agreement is oral the court will already consider everything. If the agreement is written you have to consider if an oral statement can change anything.

Question 13

What is an express term and what are the two things you have to consider in relation to it?

Answer 13

An express term is a term in a contract which has been expressly communicated and agreed by the parties.

Parol Evidence Rule (can’t admit external factors to vary terms in a contract)
Entire Agreement Clauses (where expressly exclude any terms not expressly included in the agreement)

Question 14

What is the patrol evidence rule? What are the exceptions to this (broadly outline)?

Answer 14

Jacobs v Batavia
Extrinsic evidence (usually oral) may not be admitted to vary, contradict, or interpret the terms of a written contract. Certainty of contract.

Three exceptions:

1. Contract not wholly written (Couchman v Hill)
2. Collateral contracts
3. Onerous terms

Question 15

What is the authority on the ‘contract not wholly written’ exception to the Parol Evidence Rule?
What was the key issue on which this case turned?

Answer 15

Couchman v Hill
Heifer in an auction. Express oral assurance that it was ‘unserved’. This amounted to an express term which overrode the disclaimer in the catalogue.
There was no contract until the hammer fell.
TIMING key - the oral assurance took place later than the catalogue, but before contracting, so it overrode.

Question 16

Which case would you use as the authority on collateral contracts? What is the theory behind collateral contracts?

Answer 16

J Evans and Sons
Oral assurance that goods wouldn’t be placed below deck. Placed on deck,most overboard.
Breach of collateral contract, not of the main contract.

Theory: two contracts exist, one written and one oral.
Where oral evidence can be show to be a separate collateral contract to the main contract (written) the Parol evidence rule I’ll only apply to the main contract and not the collateral one

Question 17

The oral assurance in collateral contract theory is known as what?
Who can a collateral contract exist between?
Give an example where a collateral contract existed.

Answer 17

Collateral warranty.
These allow pre-contractual oral statements to be enforceable.
So oral inconsistent terms overriding the main agreement.

Can exist between the two parties to the main contract, or one party to the main contract and a third party.

City of Westminster properties v Mudd
Lease said can’t sleep there. Agent said he could. He signed in this basis. Collateral contract.
Prom estoppel couldn’t work here since rights arose out of a FUTURE contract, not an existing one
Oral assurance in collateral contract was a term (Bannerman v White importance but for test - but for assurance he would never have signed)

Question 18

Why are onerous terms an exception to the Parol Evidence Rule for express terms? What do you have to do to incorporate them?
What is likely to happen is a term is on the borderline?

Answer 18

They are an exception due to unfairness.
To enforce an onerous term the party seeking to impose it must draw the other party’s attention to it. Have to incorporate it fairly.
Don’t need to show the other party has understood it, just have to draw their attention to it.
If on the borderline (if it requires careful handling) it will probably be covered by UCTA - so could be unenforceable by statute (s.11 reasonableness test) (AEG v Logic)

Question 19

Three cases on onerous terms.

Answer 19

ISA Interfoto, Spurling, AEG

Interfoto v Stiletto
£5 per day for transparencies. In a rush, hadn’t drawn attention to it so not incorporated.
Need sufficiency of NOTICE (there is no overriding principle of good faith in contract law)
Could be viewed as a disguised penalty but wasn’t.

Spurling v Bradshaw
Denning - needs a red hand pointing to it to incorporate.

AEG v Logic
Not onerous but fell foul of UCTA
Hobhouse keen to keep what was said in Interfoto within its proper bounds. Would otherwise have to go through with a fine toothcomb to decide if onerous or not.
Have to distinguish onerous terms from unfair terms. Need to rely on UCTA where appropriate.
Interfoto was onerous since didn’t directly relate to the rights of the parties.
Shoelane Parking related to the state of premises and personal injuries, wasn’t anything to do with the car parking contract.
UCTA will only govern the contract!!

Question 20

What is an implied term and what does this overlap with? Who should you mention?

Answer 20

A term not expressly agreed, but which in inferred into the contract.
Overlaps with interpretation of contract. Lord Wilberforce’s matrix of fact.

Have to exclude previous negotiations and subjective intent. Must make the contract yield to BUSINESS commonsense.
Fewer contortions of interpretation have been needed post-UCTA

Question 21

For the implication of terms what must you distinguish between?

Answer 21

Terms implied in fact - course of dealing, customs, business efficacy

Terms implied in law - (at CL) - to standardise, policy reasons, necessity. (Don’t exist any more - Belize)

Terms implied by statute - soga, sogasa, CRA

Question 22

What must the course of dealing be for terms to be implied in fact? Case?

Answer 22

Regular and consistent.

McCutheon v David MacBrayne

Question 23

What is the test for when terms can be implied from trade and professional customs (In fact)? 2 cases.

Answer 23

Necessity
The custom applies unless the agreement expressly or impliedly excludes it.

Smith v Wilson - 1000 rabbits meant 1200 rabbits in Suffolk!
Hutton v Warren - custom to farm land until leaving, claimed custom meant he could claim costs.

Question 24

When implying a term in fact on the basis of presumed intention which 3 cases would you use?
What is the test?

Answer 24

Moorcock, Shirlaw, Belize MSBmysweetbusiness
The Moorcock
Said can court can imply a term where it is absolutely necessary for business efficacy. Here was to check the state of the riverbed. Wouldn’t make sense without it.

Shirlaw v Southern Foundries
Officious Bystander Test (Scrutton LJ)
If an officious bystander suggested it the parties would say “oh of course!” So obv goes without saying.

Belize Telecom 2009
Hoffmann
Ultimate Intention Test - have to use when the contract doesn’t provide for some event.
(Says officious bystander and nec for bus efficacy should be additional tests)
Q= is that what the instrument, read as a whole against the relevant background, would reasonably be understood to mean?
So a matter of CONTRACTUAL INTERPRETATION and not whether or not the term should be implied.
SO contractual interpretation and implication of terms are no longer separate doctrines.

Question 25

Outline what was said in Belize.

Answer 25

Ultimate Intention Test - have to use when the contract doesn’t provide for some event.
(Says officious bystander and nec for bus efficacy should be additional tests)
Q= is that what the instrument, read as a whole against the relevant background, would reasonably be understood to mean?
So a matter of CONTRACTUAL INTERPRETATION and not whether or not the term should be implied.
SO contractual interpretation and implication of terms are no longer separate doctrines.

Business efficacy - concept is too detached from the contract itself as it is judged against some norm outside of the contract! Need to look at the contract to try work out its PURPOSE
Court shouldn’t be giving effect to business efficacy, but to what the parties intended (assuming they meant them to be reasonable)! Pacta sunt servanda.
A reasonable man might not understand what the instrument meant, so how can you judge it by his standards?
Have to look at the contract and its background to see what the parties’ intentions were.

So leaves only implication of term from custom and previous course of dealing.

So not an implication of a term but an implication of RESULT. The result ultimately intended by the contract as judged by looking at it objectively and against its own background.

Question 26

Why do courts imp,y terms in law? What is the test?
3 cases.
What should you conclude with?

Answer 26

To standardise or give effect to certain contractual relationships for policy reasons or out of necessity.
Test = necessity. Is the result necessary? If it is have to ask whether to imply the specific term is reasonable and proportionate.

Liverpool Irwin, Scally, Crossley
Liverpool CC v Irwin
Tragedy of the commons, stairwell, flats, wilberforce.
Implied term (to maintain stairwell) was nec - tenancy demands some contractual obligations by its nature. Was reasonable and proportionate to imply term.

Scally
Limit to implication of terms at law: must think to the implications it has for other contracts (if it would change them). Restrict due to policy. Legal certainty arg (others need to be able to predict how the courts will construe their contracts!)
So can ONLY imply terms in BUSINESS EFFICACY cases.

Crossley
Nec test described as protean and elusive. Need to recognise role of reasonableness, fairness, and balancing of competing policy considerations.
Adds succour to Hoffmann in Belize.

Conclude with Belize. Implication based on presumed intention is now an extension of contractual interpretation, so no longer have a need for implication of terms at LAW. All that remains is implication of terms in fact from custom. This is the proper place for the requirement of necessity.

Question 27

If a term has been breached what do you have to think about?

Answer 27

Whether it was a condition, warranty, or innominate term.

Condition: an important term which goes to the root of the contract.
Right to election in breach: s perf, damages.

Warranty: less important than a condition, doesn’t go to the root of the contract. COLLATERAL to the main contract.
Damages on breach. Primary contractual obligations remain.
C must also take reasonable steps to mitigate the losses stemming from the breach.

Innominate term: term not classified as a condition or a warranty when the contract was formed. Look at the the breach. Term takes on the form of the breach. Threshold for condition high.

Question 28

Case on conditions?

Answer 28

Schuler v Wickman
Condition was rejected in the case, but it is the authority on the fact that a condition is a term going to the root of the contract.
Was rejected here as led to an unreasonable result. Unreasonable result indicates that it is unlikely the parties ever intended it.

If they do intend it then they should make the result absolutely clear.

Question 29

Case on innominate terms?

Answer 29

Hong Kong Fir, per Lord Diolock
Could it have been caused by different things, could the breach have led to different results. Did the breach lead to depriving one party of substantially the whole benefit of the contract? Treat as a condition if so (right of election available), if not then treat as a warranty (damages).
Term takes on the form of the breach, threshold for conditions high.

Unseaworthiness clause. Unseaworthiness could have been caused by engine failure, staff, hull, machinery, etc.
If breached in a way which goes to the root of the contract then a condition. Has to substantially deprive of the whole benefit of the contract for it to be treated like a condition (threshold very high).

So right to terminate arises not so much from the breach itself, but from the event which the breach constitutes.
Here was treated more like a warranty - while benefit of contract hadn’t been deprived - they still had the benefit of the ship (it has just been unseaworthy for longer than it should have been)
They wanted to terminate pas wanted to do a deal with a cheaper ship. It wasn’t for the courts to get them out of a bad bargain!

Question 30

How will expected readiness to load clauses be treated?

Answer 30

As conditions (innominate terms analysis)
The Mihalis Angelos
So they could terminate for the breach. Law needs to be predictable.

Question 31

Which case was about citrus pulp pellets? What happened and what was the point of law?

Answer 31

The Hansa Nord.
The Hong Kong Fir Diplock innominate terms analysis can apply to goods contracts too.

Pulp pellets were damaged in shipment, they bought them back from a third party at a lower cost later. So hadn’t deprived them of substantially the whole benefit of the contract, so innominate term was treated more like a warranty than a condition.

Question 32

In which case was the innominate term analysis argues but rejected? Why was it rejected?

Answer 32

Bunge v Tradax
Time for performance clauses. Had to give 15 days notice for when the vessel would be ready to load.
Time for performance clauses will always be conditions, not innominate terms. In mercantile contracts these go to the root of the contract.

So cautious attitude of courts wrt classifying terms as innominate.

Distinguish from Hong Kong Fir: breach of a time clause like this will always lead to disastrous results. Only one kind of breach possible: to be late. Have to look at the importance the parties ascribe to the clause (time clauses in mercantile contract v important, so conditions)
Same could be true if the phrase ‘time is of the essence’ was used.

Question 33

What are exemption clauses? Case?

Answer 33

Excuses which become relevant when a party has breached its obligations.

Definition: a contractual term which purports to limit or exclude liability which would otherwise attach to one of the contracting parties (Photo Productions v Securior)

Question 34

What must exemption clauses satisfy in order to be enforceable?

Answer 34

Incorporation (signature, reasonable notice, consistent and regular course of dealing)

Construction (this is contractual interpretation)

Question 35

What is the general rule for incorporation of exclusion clause by signature?
Three exception? 4 cases to mention overall.

Answer 35

General rule: a signature will bind the signing party (L’Estrange v Graucob cf. Tilden (Canada))

L’Estrange v Graucob
She didn’t read the sales doc she had signed, she should’ve done, the risk was hers
Cf.
Tilden (Canadian case)
Vvv small type not read, treated as a case of snapping up.
Criticism: one party shouldn’t have to tutor the other on what the exemption clause means. The rule in L’Estrange v Graucob is clear and widely known, so should give effect to it.

Exceptions:
1. Doc not legally binding (Grogan v Meredith - time sheet not a contractual doc, was administrative)

2. Misrep of clause (Curtis v Chemical Cleaning), dress in a shop, assistant misrepresented the term, said just for beads, was really exempting liability for the whole dress)
   WILL ONLY HAVE EFFECT UP TO THE EXTENT IT HAS BEEN REPRESENTED - makes it look like an estoppel.
3. Where defence of non est factum applies - won’t bind if mistaken as to terms meaning/effect through no fault of your own or the other party’s. Sort of like a mutual mistake.

Question 36

For incorporation of exclusion clauses by reasonable notice what must be true?

Answer 36

The preference must take reasonable steps to bring the item to the other party’s attention (Parker v SE Railway). Must be legible, have to draw attention to it, if in reverse must be referred to open its face.

Can be incorp by ref to another doc (Thompson v London Railway)
Notice must be given to other party at time of contracting (Olley v Marlborough Court; Thornton v Show Lane Parking)

Greater notice required for onerous clauses (Interfoto v Stilletto; Thornton v Shoe Lane Parking)
Red hands red ink (Surling Bradshaw), but a signature will generally incorp onerous clauses.
Written doc must have contractural effect (Grogan v Meredith time sheet)

Question 37

Which two cases are referred to as ‘the ticket cases’? What is the point of law?

Answer 37

Incorp of exemption clause by Notice
Ticket = offer which customer is free to accept/reject once he has read the legal burden. Doesn’t make much sense. Cf. Chappelton v Barry.
This is a legal fiction, when the ticket is issued the deal is done. Incorp coming too late.
Parker v SE Railway
Printed on reverse,must refer to on face of doc. C admitted he had known there were terms in the ticket, so legal fiction wasn’t a problem.

Thompson v London Railway
Ticket referred to another doc - had to pay for the brochure (only 1 copy) to read the exemption clause.
D still won! The term was ascertainable. (This was pre-UCTA, wouldn’t be allowed now)

Chappelton v Barry
Deck chairs on beach, sitting was acceptance, ticket came after contract conclusion, so term not incorp.
If a stipulation is made post-contract need a signature to incorp. Need to vary the contract for good consideration.

Question 38

When must notice to incorp an exemption clause be given to the other party?

Answer 38

Before or at the time of contracting.
Olley v Marlborough Court
Hotel, 6 months, notice on door excluding liability for valuables not incorp. One contract, it wasn’t a case of Sep contracts each time they renewed.
Needed to be a prominent public notice, or express oral stipulation to incorp.

Thornton v Shoe Lane Parking
“All cars parked at owner’s risk”
Notice at entrance of car park - D’s hadn’t done what was fairly necessary to bring the clause to C’s attention before or at the time of contracting. Greater notice required for onerous clauses (ticket referred to notice, but this wasn’t enough)
Notice was also too broad, didn’t make reference to personal injury.

Question 39

Is there any flexibility in the incorporation of exemption clauses by notice?

Answer 39

Yes
British Crane Hire
Same line of business, used versions of the same common form. Rush agreement made on telephone, forms signed later. Terms WERE incorporated even though came after contract conclusion (Olley v Marlborough Court; Thornton v Shoe Lane Parking)

Entitled to assume contract would be formed on normal conditions.

Question 40

Which case would you use as the authority on incorp of exemption clauses by regular course of dealing?

Answer 40

McCutcheon v David MacBrayne
If course of dealing consistent and regular then term may be incorp.
Inconsistency in this case (risk note was sometimes signed, and sometimes not) so term wasn’t incorp.

Question 41

What is the test for construction (interpretation) of exemption clauses?

Answer 41

The clause must cover breach on its natural and ordinary meaning.

Rules:
1. Contra Proferentum Rule (Andrew Bros v Singer)
Where there is AMBIGUITY in a clause it will be interpreted against the proferens.

2. Exclusion of liability for negligence (Canada Steamship)

Question 42

How do courts typically construe exemption clauses? Case?

Answer 42

Narrowly
Wallis, Son and Wells v Pratt
Court construed narrowly (I.e. Only excluding liability for breach of warranty and not conditions)
This is ok since it is widely known that courts construe exemption clauses narrowly. Predictability.
Note have to do this for consumer contracts anyway due to cording of CRA 2015.

Question 43

What are the two cases on the contra proferentum rule?

Answer 43

Andrew Bros v Singer
Where there is AMBIGUITY in an exemption clause it will be interpreted against the proferens.

Ailsa Craig v Malvern Shipping
Contra proferentum rule is allied less strictly to limitation clauses than exemption clauses.

Question 44

Two examples of court interpreting exemption clauses?

Answer 44

Karsales v Wallis
Peas and beans decision. Contact for a car. What was sold wasn’t a car as was so badly damaged.
Criticism: peas and beans is a hard line to draw. Subjectivity involved. When is a car not a car?
Solution: this is a case of non-performance, rather than defective performance. Can’t exclude non-performance!
SO, logically, exemption clauses must stop short of total efficacy.

Photo Productions v Securior
Condition breached
Exemption clause applied (to a breach of condition!) on the true construction of the contract.
So here a fundamental breach was ok,midday avoid the contract.

Question 45

When will a fundamental breach avoid the contract?

Answer 45

When it is a peas and beans decision.
Karsales v Wallis
Makes it look like a certain a type of breach is too fundamental to be successfully excluded. Not true:
Cf. Photo Productions v Securior
Fundamental breach was excluded.
Only where peas and beans can fundamental breach NOT be excluded.

Question 46

What are contracts of bail meant deemed as?

Answer 46

Sui generis (completely unique)
Any diversion of goods from where they are to be kept or any deviation from the voyage will take the performance outside the 4 corners of the contract, so exclusion clauses won't apply.

Question 47

Which case is the authority on exclusion of liability for negligence?

Answer 47

Canada Steamship, per Lord Morton

Canada Steamship rules.
Is negligence expressly mentioned in the clause?

Yes
Is the clause too wide? If yes it doesn’t cover neg. if covers tort and contract then it won’t cover neg as will be too wide. If covers something else it will be deemed too wide so won’t cover neg.

No
Is the clause wide enough to cover neg? The words will be interpreted according to their ordinary meaning.

Question 48

What is the general rule for incorporation of exclusion clause by signature?
Three exception? 4 cases to mention overall.

Answer 48

General rule: a signature will bind the signing party (L’Estrange v Graucob cf. Tilden (Canada))

L’Estrange v Graucob
She didn’t read the sales doc she had signed, she should’ve done, the risk was hers
Cf.
Tilden (Canadian case)
Vvv small type not read, treated as a case of snapping up.
Criticism: one party shouldn’t have to tutor the other on what the exemption clause means. The rule in L’Estrange v Graucob is clear and widely known, so should give effect to it.

Exceptions:
1. Doc not legally binding (Grogan v Meredith - time sheet not a contractual doc, was administrative)

2. Misrep of clause (Curtis v Chemical Cleaning), dress in a shop, assistant misrepresented the term, said just for beads, was really exempting liability for the whole dress)
   WILL ONLY HAVE EFFECT UP TO THE EXTENT IT HAS BEEN REPRESENTED - makes it look like an estoppel.
3. Where defence of non est factum applies - won’t bind if mistaken as to terms meaning/effect through no fault of your own or the other party’s. Sort of like a mutual mistake.

Question 49

For incorporation of exclusion clauses by reasonable notice what must be true?

Answer 49

The preference must take reasonable steps to bring the item to the other party’s attention (Parker v SE Railway). Must be legible, have to draw attention to it, if in reverse must be referred to open its face.

Can be incorp by ref to another doc (Thompson v London Railway)
Notice must be given to other party at time of contracting (Olley v Marlborough Court; Thornton v Show Lane Parking)

Greater notice required for onerous clauses (Interfoto v Stilletto; Thornton v Shoe Lane Parking)
Red hands red ink (Surling Bradshaw), but a signature will generally incorp onerous clauses.
Written doc must have contractural effect (Grogan v Meredith time sheet)

Question 50

Which two cases are referred to as ‘the ticket cases’? What is the point of law?

Answer 50

Incorp of exemption clause by Notice
Ticket = offer which customer is free to accept/reject once he has read the legal burden. Doesn’t make much sense. Cf. Chappelton v Barry.
This is a legal fiction, when the ticket is issued the deal is done. Incorp coming too late.
Parker v SE Railway
Printed on reverse,must refer to on face of doc. C admitted he had known there were terms in the ticket, so legal fiction wasn’t a problem.

Thompson v London Railway
Ticket referred to another doc - had to pay for the brochure (only 1 copy) to read the exemption clause.
D still won! The term was ascertainable. (This was pre-UCTA, wouldn’t be allowed now)

Chappelton v Barry
Deck chairs on beach, sitting was acceptance, ticket came after contract conclusion, so term not incorp.
If a stipulation is made post-contract need a signature to incorp. Need to vary the contract for good consideration.

Question 51

When must notice to incorp an exemption clause be given to the other party?

Answer 51

Before or at the time of contracting.
Olley v Marlborough Court
Hotel, 6 months, notice on door excluding liability for valuables not incorp. One contract, it wasn’t a case of Sep contracts each time they renewed.
Needed to be a prominent public notice, or express oral stipulation to incorp.

Thornton v Shoe Lane Parking
“All cars parked at owner’s risk”
Notice at entrance of car park - D’s hadn’t done what was fairly necessary to bring the clause to C’s attention before or at the time of contracting. Greater notice required for onerous clauses (ticket referred to notice, but this wasn’t enough)
Notice was also too broad, didn’t make reference to personal injury.

Question 52

Is there any flexibility in the incorporation of exemption clauses by notice?

Answer 52

Yes
British Crane Hire
Same line of business, used versions of the same common form. Rush agreement made on telephone, forms signed later. Terms WERE incorporated even though came after contract conclusion (Olley v Marlborough Court; Thornton v Shoe Lane Parking)

Entitled to assume contract would be formed on normal conditions.

Question 53

Which case would you use as the authority on incorp of exemption clauses by regular course of dealing?

Answer 53

McCutcheon v David MacBrayne
If course of dealing consistent and regular then term may be incorp.
Inconsistency in this case (risk note was sometimes signed, and sometimes not) so term wasn’t incorp.

Question 54

What is the test for construction (interpretation) of exemption clauses?

Answer 54

The clause must cover breach on its natural and ordinary meaning.

Rules:
1. Contra Proferentum Rule (Andrew Bros v Singer)
Where there is AMBIGUITY in a clause it will be interpreted against the proferens.

2. Exclusion of liability for negligence (Canada Steamship)

Question 55

How do courts typically construe exemption clauses? Case?

Answer 55

Narrowly
Wallis, Son and Wells v Pratt
Court construed narrowly (I.e. Only excluding liability for breach of warranty and not conditions)
This is ok since it is widely known that courts construe exemption clauses narrowly. Predictability.
Note have to do this for consumer contracts anyway due to cording of CRA 2015.

Question 56

What are the two cases on the contra proferentum rule?

Answer 56

Andrew Bros v Singer
Where there is AMBIGUITY in an exemption clause it will be interpreted against the proferens.

Ailsa Craig v Malvern Shipping
Contra proferentum rule is allied less strictly to limitation clauses than exemption clauses.

Question 57

Two examples of court interpreting exemption clauses?

Answer 57

Karsales v Wallis
Peas and beans decision. Contact for a car. What was sold wasn’t a car as was so badly damaged.
Criticism: peas and beans is a hard line to draw. Subjectivity involved. When is a car not a car?
Solution: this is a case of non-performance, rather than defective performance. Can’t exclude non-performance!
SO, logically, exemption clauses must stop short of total efficacy.

Photo Productions v Securior
Condition breached
Exemption clause applied (to a breach of condition!) on the true construction of the contract.
So here a fundamental breach was ok,midday avoid the contract.

Question 58

When will a fundamental breach avoid the contract?

Answer 58

When it is a peas and beans decision.
Karsales v Wallis
Makes it look like a certain a type of breach is too fundamental to be successfully excluded. Not true:
Cf. Photo Productions v Securior
Fundamental breach was excluded.
Only where peas and beans can fundamental breach NOT be excluded.

Question 59

What are contracts of bail meant deemed as?

Answer 59

Sui generis (completely unique)
Any diversion of goods from where they are to be kept or any deviation from the voyage will take the performance outside the 4 corners of the contract, so exclusion clauses won't apply.

Question 60

Which case is the authority on exclusion of liability for negligence?
Which case subsequently provided clarity?

Answer 60

Canada Steamship, per Lord Morton

Canada Steamship rules.
Is negligence expressly mentioned in the clause?

Yes
Is the clause too wide? If yes it doesn’t cover neg. if covers tort and contract then it won’t cover neg as will be too wide. If covers something else it will be deemed too wide so won’t cover neg.

No
Is the clause wide enough to cover neg? The words will be interpreted according to their ordinary meaning.

Hollier v Rambler Motors
Provided clarity on how broad the wording can be for the Canada Steamship rules: meaning must be plain on its face.

Question 61

What are the two views of exemption clauses? Which do you prefer?

Answer 61

Social nuisance (so narrow construction preferred)
vs
Useful in business contracts (for fine-tuning so can avoid going to court)
They indicate where the risk is to lie and can be a means of facilitating transactions that otherwise wouldn’t go ahead since impractical.

Question 62

What are the two main statutory provisions you need to remember to look at and mention for unfair terms and excusing clauses?

Answer 62

UCTA sets a limit to free contracting, only applies to non-consumer contracts
S.11 - 4 reasonableness tests, schedule 2 for guidelines on how to apply these reasonableness tests.

62(4) CRA 2015: a term is unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations under the contract to the detriment of the consumer.