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Law Paper 3 - Contract Law + Nature of Law > Terms - Exclusion and Limitation Clauses > Flashcards

Terms - Exclusion and Limitation Clauses Flashcards

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1
Q

What is an exclusion clause?

A

A term in a contract that prevents one party being liable for a breach of contract

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2
Q

What is a limitation clause?

A

A term in a contract that sets an upper limit on liability for a breach of contract

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3
Q

What factors have to be considered when considering whether a term is part of the contract?

A
  1. Whether the agreement is signed
  2. Whether any notice with the term in it is incorporated in the contract
  3. Whether the term is incorporated as a result of the previous dealings with the parties
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4
Q

What are the cases for whether the agreement is signed?

A
  1. L’Estrange vs Graucob
  2. Curtis vs Chemical Cleaning and Dyeing Co. Ltd
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5
Q

What is the POL from L’Estrange vs Graucob?

A

She signed a contract including a clause that excluded all implied conditions and warranties so was bound by that clause

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6
Q

What is the POL from Curtis vs Chemical Cleaning and Dyeing Co. Ltd?

A

The cleaners could not rely on the exclusion clause due to the oral assurances made to Mrs Curtis

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7
Q

What are the cases for whether any notice with the term in it is incorporated in the contract?

A
  1. Olley vs Marlborough Court Hotel
  2. Chapelton vs Barry Urban District Council
  3. Thompson vs London, Midland and Scottish Railway Co.
  4. Thornton vs Shoe Lane Parking Ltd
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8
Q

What is the only situation in which incorporation can be valid?

A

If at the time the contract was made, the unsigned document was brought to the attention of the person suffering the exclusion clause

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9
Q

What is the POL from Olley vs Marlborough Court Hotel?

A

The clause was not incorporated into the contract since it was on a notice inside the Olley’s bedroom and could not have been known about when they made the contract

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10
Q

What is the POL from Chapelton vs Barry Urban District Council?

A

It was unreasonable to assume that Mr Chapelton would automatically understand that the ticket was a contractual document, so the council were held liable for his injuries

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11
Q

What is the new ruling on Chapelton vs Barry Urban District Council?

A

Due to CRA15 a contract cannot exclude liability for personal injury or death

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12
Q

What is the POL from Thompson vs London, Midland and Scottish Railway Co.?

A

It was common knowledge that railway journeys were contracts and that there were terms of carriage involved. The fact that Mrs Thompson was illiterate and couldn’t read them did not alter the legal position

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13
Q

What is the POL from Thornton vs Shoe Lane Parking Ltd?

A

SLP had not done enough to bring the terms to Thornton’s attention prior to contract formation. The offer was contained within the notice at the entrance and he accepted the offer on them terms when he drove in. It was too late to seek to incorporate further terms after he had driven in to the car park

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14
Q

What are the cases for whether the term is incorporated as a result of the previous dealings with the parties?

A
  1. Hollier vs Rambler Motors
  2. McCutcheon vs David MacBrayne Ltd
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15
Q

What is the POL from Hollier vs Rambler Motors (exclusion clauses)?

A

It is possible to imply knowledge of the clause from the past dealings, provided there has been a consistent course of dealing

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16
Q

What is the POL from McCutcheon vs David MacBrayne Ltd?

A

There was no consistent course of action that allowed them to assume that the claimant knew that the exclusion clause was lawyas present, so it was not incorporated in the contract

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17
Q

Before the Contracts (Rights of Third Parties) Act 1999, could third parties rely on exclusion clauses?

A

No

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18
Q

What is the case for before the Contracts (Rights of Third Parties) Act 1999, could third parties rely on exclusion clauses?

A

Scruttons Ltd vs Midland Silicones Ltd

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19
Q

What is the POL from Scruttons Ltd vs Midland Silicones Ltd?

A

The defendant could not rely on an exlusion clause in the contract between the owner of the goods and the owner of the ship as he was a third party

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20
Q

What is the new ruling for third parties and exclusion clauses?

A

Under the Contracts (Rights of Third Parties) Act 1999, third parties can now rely on an exclusion clause if all other requirements of the Act are met and the Act itself is not excluded

21
Q

What is the contra proferentem rule?

A

When there is doubt about the meaning of a term, the words will be construed against the person who put them in the contract

22
Q

What is the case for the contra proferentem rule?

A

Tansocean Drilling UK Ltd vs Providence Resources plc

23
Q

What is the POL from Tansocean Drilling UK Ltd vs Providence Resources plc?

A

The contra proferentem rule is only to be used when the term is both one-sided and ambiguous. If the meaning of the words is clear, then the rule is not to be used

24
Q

What are the 2 statutory controls for exclusion clauses?

A
  1. Unfair Contract Terms Act 1977
  2. Consumer Rights Act 2015
25
Q

What does the Unfair Contract Terms Act 1977 apply to?

A

Applies to exclusions for liability in tort as well as contractual breaches

26
Q

What type of contracts does the Unfair Contract Terms Act 1977 apply to?

A

Business-to-Business contracts

27
Q

What does the Unfair Contract Terms Act 1977 make void?

A
  1. Under 2(1), death or personal injury caused by negligence
  2. Under s.2(2) in the case of other loss or damage, a person cannot exclude or restrict his liability for negligence except in so far as it reasonable to do so
  3. Under s 6(1) the implied condition as to title (the Sale of Goods Act 1979 and s 7 of the Supply of Goods and Services Act 1982) cannot be excluded
28
Q

What is s 3 of the Unfair Contract Terms Act 1977?

A

Imposes a reasonableness test to contract

29
Q

What are the 4 section numbers for the different reasonable tests?

A
  1. S 11(1)
  2. S 11(2)
  3. S 11(4)
  4. S 11(5)
30
Q

What is S 11(1) regarding a reasonableness test?

A

Concerns exclusion clauses in general

It considers what was known to the parties at the time when the contract was made, therefore, it is sometimes called the knowledge test

31
Q

What is the case for S 11(1) - the knowledge test?

A

Smith vs Eric S. Bush

32
Q

What is the POL from Smith vs Eric S. Bush?

A

There was a clause excluding liabilty for the accuracy of the valuation report which then missed a defect - this was unreasonable

33
Q

What is S 11(2) regarding a reasonableness test?

A

Covers exclusion clauses involving breaches of the impliekd conditions in business-to-business contracts

34
Q

Where are the criteria for S 11(2) set out?

A

Sch 2 of the Unfair Contracts Terms Act 1977

35
Q

What are the criteria for the S 11(2) reasonableness test?

A
  1. The strength of the bargainin position of the parties relative to each other
  2. Whether the customer recieved an inducement to agree to the term
  3. Whether the customer knew of the existence and the extent of the term
  4. Whether the term excludes or restricts any liability if some condition is not complied with
  5. Whether the goods were manufactured, processes or adapted to the special order of the customer
36
Q

What is the case for the reasonableness test from S 11(2)?

A

Watford Electronics Ltd vs Sanderson CFL Ltd

37
Q

What is the POL from Watford Electronics Ltd vs Sanderson CFL Ltd?

A

The court said that is was a reasonable term as the parties were of equal bargaining power and the limitation clause was subject to negotion when the contract was made

38
Q

What is S 11(4) regarding a reasonableness test?

A

Specifically relates to limitation clauses

39
Q

What are the criteria from S 11(4)’s reasonableness test?

A
  1. The resources which the defendant could expect to be avaliable for meeting his liability, should it arise
  2. How far it was open to the defendant to cover himself by insurance against any successful claim
40
Q

What is the case for the reasonableness test from S 11(4)?

A

George Mitchell Ltd vs Finney Lock Seeds Ltd

41
Q

What is the POL from George Mitchell Ltd vs Finney Lock Seeds Ltd?

A

The court said the clause was unreasonable because:

  1. The breach arose from the seller’s negligence
  2. The seller could have insured against crop failure at a modest cost
  3. In the past the seller had settled claims which exceeded the limitation sum - this showed that the seller himself did not always consider the clause fair and reasonable
42
Q

What is section 11(5) for the reasonableness test?

A

Requires the party inserts the clause in the contract, and who seeks to rely on it, to show it is reasonable in all the circumstances

43
Q

What is the case for section 11(5) and the reasonableness test?

A

Warren vs Trueprint Ltd

44
Q

What is the POL Warren vs Trueprint Ltd?

A

Trueprint was unable to show that the clause was reasonable when it lost a couple’s silver wedding photos

45
Q

What does the Consumer Rights Act 2015 include regarding exclusion and limitation clauses?

A
  1. A ‘fairness test’ for enforceability of terms and consumer notices
  2. A provision that the main subject matter of the contract or terms that set the price are only exempt from the fairness test if they are ‘transparent and prominent’
  3. A ‘grey list’ of potentially unfair clauses in consumer contracts
46
Q

What does Section 31 of the CRA15 prohibit a term excluding regarding to the sale of goods?

A
  1. Section 9 (satisfactory quality)
  2. Section 10 (fit for purpose)
  3. Section 11 (goods match the description)
  4. Section 14 (goods match a model seen or examined)
  5. Section 15 (installation as part of conformity of the goods with the contract)
  6. Section 16 (goods not conforming to contract if digital content doesn’t conform)
  7. Section 17 (trader has the right to supply the goods)
47
Q

What does Section 57 of the CRA15 prohibit a term excluding regarding the supply of services?

A
  1. Section 49 (reasonable care and skill)
  2. Section 50 (information about the trader or service to be binding)
  3. Section 51 (reasonable price)
  4. Section 52 (reasonable time)
48
Q

What does Section 65 of the CRA15 prohibit excluding?

A

Liability for death or personal injury resulting from negligence

49
Q

What is Section 62 of the CRA15?

A

There is a requirement for all consumer contract terms and notices to be fair

Law Paper 3 - Contract Law + Nature of Law (9 decks)

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