Terms (exclusion Clauses)

Question 1

What is the definition of an Exclusion clause?

Answer 1

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

Question 2

What is the definition of a limitation clause?

Answer 2

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

Question 3

What is the common law controls?

Answer 3

Incorporation rules

Question 4

Which three ways can a exclusion be incorporated into a contract ?

Answer 4

By signature , by notice , by previous dealings

Question 5

What case represents incorporation through signatures ?

Answer 5

L’Estrange v Graucob 1930
- buyer of cigarette machine
- signed document that was not read before hand
- the contract excluded the implied term of satisfactory quality
- although not read it was still binding

Question 6

What is the main exception to the incorporation by signature?

Answer 6

If mislead or lied to this rule will not apply

Question 7

What was the exception made by lord denning on the matter of signatures ?

Answer 7

Lord denning Red Hand Rule
- all exclusions should be made aware and clear in the contract

Question 8

Curtis v chemical cleaning

Answer 8

C took a wedding dress to be cleaned.
She signed a document + was told they wanted to exclude liability for damage to beads and sequins
- she signed as she had no beads or sequins
- it came out with a stain
- they had lied to her (this created the exception)

Question 9

What does incorporation by notice create the rule of?

Answer 9

Before acceptance was the term brought to the attention of the person who would suffer from this term

Question 10

Which case illustrated the rule of the exclusion being brought to attention before a contract being made

Answer 10

Olley v Marlborough court
Cs checked into the hotel. A notice on the back of their door “no liability for property lost or stolen”
- held: the c did not agree to it as the contract was made before the exclude was made aware

Question 11

Which three cases show the uncertainty about incorporating by notice ?

Answer 11

Chapelton v Barry urban district council
- deck chairs for hire / no exclusion on sign
- not incorporated due to the ticket not being a contractual document
Thompson
- the woman was illiterate
- held was incorporated/ reasonable person would have been aware the ticket notice
Thornton
- was not incorporated because the ticket was issued after the payment and the full term was only display inside the car park

Question 12

What is incorporation by a previous course of dealing ?

Answer 12

It only applies to an exclusion clause if there has been a consistent course of dealing’ on the same term

Question 13

Which case used incorporation by previous dealings?

Answer 13

McCutcheon v MacBrayne
C had used these ferries often; some times but not all ways
- relative took the car this time and got a ticket
- he didn’t read it nor sign it
- ferry sank and destroyed car
Held : not consistent action to be able to assume claimant knew the exclusion

Question 14

What is the contra proferentem rule ?

Answer 14

A term should be interpreted least favourably against the person who introduced it

Question 15

Which case adds an exception to the contra proferentem rule?

Answer 15

Transocean drilling v providence
This rule should only be used for terms in a contract if they are one sided or ambiguous

Question 16

What are the two statues under statutory control?

Answer 16

UCTA - unfair contract terms act 1977
CRA - consumer rights act 2015

Question 17

What section are there in UCTA?

Answer 17

S2.1
S2.2
S3
S6
S11

Question 18

S2.1

Answer 18

States that a business cannot exclude liability for negligently causing death or personal injury

Question 19

S2.2

Answer 19

Business cannot exclude liability for other forms of loss or damage due to negligence unless it is reasonable to do
so

Question 20

S6.1

Answer 20

Business can never exclude the implied term that the seller has the right to sell. Implied term come from supply of good + services act 1982

Question 21

S3

Answer 21

Non negotiated terms must be reasonable

Question 22

S11

Answer 22

Gives guidelines on what is meant by reasonable

Question 23

What are the guidelines on s11

Answer 23

• Burden of proof : the party who is trying to exclude liability has the burden of proving that the term is reasonable
• the knowledge test: was the term ‘reasonable’ in light of what the parties knew at the time
• exclusion of implied terms: if a business tries to exclude implied terms the court must decide if reasonable by looking at 5 factors

Question 24

S11.2 exclusion of implied terms : factors

Answer 24

• inducements
• knowledge
• relative bargaining strength
• special order goods
• likelihood of compliance with terms excluded

Question 25

S11.4 limitation clauses

Answer 25

Try to limit the extent of Ds liability if the contract is breached

Question 26

What classes as reasonable with in limitation clauses act?

Answer 26

• D reasonably would not have sufficient resources to pay the full amount
• it would. It have been possible for D to arrange insurance to cover the cost of any claim

Question 27

Consumer rights act 2015

Answer 27

S49
S51
S62
Fairness test
Grey list

Question 28

S62

Answer 28

All other terms in consumer contracts must be fair
UNFAIR - those which put the consumer at a disadvantage by limiting the consumer rights or increasing their obligations compared to traders
MAIN SUBJECT MATTER - must be transparent (plain legible language) AND prominent (brought to consumers attention)

Question 29

S49

Answer 29

Services to be performed with reasonable care + skill

Question 30

S51

Answer 30

Reasonable price