Terms- exclusion and limitation clauses

Question 1

What are exclusion and limitation clauses?

Answer 1

They are terms in a contract that either try to exclude liability completely or limit liability to a specific amount of money.

Question 2

When are exemption clauses usually used?

Answer 2

These are often contained in pre-written contracts. Its important that the person signing the contract knows of any exclusion clauses, else it would be unfair.

Question 3

What are the common law controls?

Answer 3

Courts would look at whether the term is part of a contract and would consider:

1. Signed
2. Notice
3. Previous dealings

The party wishing to rely on the clause must prove that it formed part of the contract and the other party knew of it.

Question 4

Whats the rules with signed contracts?

Answer 4

If the contract is signed, the person who has signed it is presumed to have read the terms of the contract, and by signing they are bound by them regardless of if they understand.

Question 5

What happened in L’Estrange V Jacob?

Answer 5

Contract included exclusion clauses, she had not read the terms before signing. As she had signed she was bound by it and could not claim.

Question 6

What happened in Curtis V Chemical cleaning?

Answer 6

Signed a document which contained an exclusion clause, although they misrepresented what was excluded.
The rule that if they signed are bound does not work if they are misrepresented whats involved.

Question 7

What happened in Grogan V Robin plant hire?

Answer 7

Signed a timesheet which contained a exclusion clauses.

If they sign a document which is not usually a contractual document then it will not be considered one.

Question 8

What is the rule with unsigned contracts?

Answer 8

This includes a notice or a ticket. The document must be one that a reasonable person would expect to be contractual and include exclusion clauses.

Question 9

What happened in Chapelton V Barry?

Answer 9

Ticket to hire a deckchair was not a contractual document and it was also given after purchase so invalid.

Question 10

What must the party wanting to rely on an unsigned document such as a ticket prove?

Answer 10

Person wanting to rely on an exemption clause must show that reasonable steps were taken to ensure the other party was given notice of the clause and notice was given before the contract.

Question 11

What happened in Sugar V LMS railway?

Answer 11

Ticket with exception on the back was obscured by date stamp. Therefore notice had not been given.

Question 12

What was stated in Spurling V Bradshaw and which case illustrates this?

Answer 12

The more unreasonable the clause the more notice must be given.

Thornton V Shoe lane parking- Car park excluded liability for all personal injury and death. As it was unreasonable more notice had to be given than just a notice inside therefore it was invalid.

Question 13

What happened in Olley V Marlborough court?

Answer 13

After check-in there was a notice on the back of the hotel room door which contained an exclusion clause. Contract had already been made therefore invalid.

Question 14

What is a course of dealings?

Answer 14

When theres evidence of previous dealings so they have done business before in a particular way they there may already be notice of exclusion clauses.

Question 15

What happened in Hardwick game farm V Suffolk poultry producers?

Answer 15

Regularly did business, terms were written on a sold note. Were expected to know the terms as they had worked together so many times in the past.

Question 16

What happened in Mcmutcheon V David Macbrayne?

Answer 16

Ferry company cannot assume someone knows of the clauses just as they knew people who regularly used the service.
Must make everyone aware of the clause.

Question 17

What will the courts consider when it comes to wording?

Answer 17

The courts will interpret the wording of the clause to see if it covers what has incurred. Must exactly cover what happened and if there is any doubt they will declare it contra proferentem and it becomes invalid.

Question 18

What happened in Transocean drilling V Providence resources?

Answer 18

The clause benefitted both parties and allowed both parties to allocate losses fairly.
Usual rule that exclusion clauses should be contra proferentem when there is doubt was not followed as it was fairer on both the parties.

Question 19

What does the unfair contract terms act 2017 cover?

Answer 19

Deals with exclusion clauses in both contracts and non-contractual documents. Mostly concerned with non-consumer contracts.

Question 20

The act makes which exclusion clauses invalid?

Answer 20

• S.2(1) A person cannot exclude liability for death or personal injury caused by negligence.
• Any clause which tries to exclude/limit the implied terms in the sale of goods act 1979 is void.

Question 21

What will be considered reasonable?

Answer 21

What will be considered reasonable is contained within S.11(2).
Judges will look at guidelines and the circumstances of the case before decided whether its reasonable.
The party who wants to use the clause must show that its reasonable.

Question 22

What happened in Warren V Trueprint?

Answer 22

Clause stated they were only liable for replacement film if original was lost/damaged during processing.
Gave shots of wedding which they lost but they never had the negatives. Clause was unreasonable as they should be liable for losing photos.

Question 23

What is the reasonable test?

Answer 23

Courts should ask whether the term is reasonable when taking into account all of the circumstances.

Question 24

What happened in Smith V Eric bush?

Answer 24

Unreasonable to include a clause stating that the property surveyors were not liable for any inaccuracies.
Unreasonable as it was their job to ensure it was accurate.

Question 25

What does schedule 2 refer to?

Answer 25

1. The strength of the parties bargaining positions, more likely to be reasonable if they’re in similar positions.
2. Where the customer received inducement to accept e.g. lower price.
3. Whether the customer knew the extent of the term.
4. Should they have known about the term from previous dealings.
5. Whether the goods have been adapted on behalf of the customer.
6. Whether the business can unilaterally add or change a clause e.g. can they always make changes, if so they’re more unfavourable.

Question 26

What are statutory controls in the consumer rights act 2015?

Answer 26

• S.62, The enforceability of a term or customer notice is subject to a ‘fairness test’. There is a general requirement that all consumer contracts are fair.
• S.31, Prohibits the use of exclusion clauses relating to the sale of goods.
• S.57, Prohibits the use of exclusion clauses relating to the supply of services.
• S. 57, Prohibits the use of exclusion clauses that limit liability for death.