Unfair Contract Terms

Question 1

Exemption Clause

Answer 1

A clause which seeks to limit/ avoid liability.

Question 2

Two ways courts attempt to limit exemption clauses?

Answer 2

• They question whether it has been incorporated into the contract.
• They question whether the words used in clause cover the breach.

Question 3

Three ways of incorporating exemption clauses?

Answer 3

• By Signature
• By reasonable notice
• By previous dealing

Question 4

Incorporation by signature:

Answer 4

Signed documents made contents terms.

L’Estrange v Graucob

Question 5

Incorporation by reasonable notice:

Answer 5

Terms only become part of contract if the recipient had reasonable notice of them.

Parker v Southeastern Railway

Question 6

What do courts look at when deciding if reasonable notice had been given?

Answer 6

• Timing of notice
• Form of notice
• Effect of clause

Question 7

Incorporation by previous dealing:

Answer 7

If both parties had made contracts with one another in the past with exemption clauses present, then it still applies to subsequent dealings.

Spurling v Bradshaw

Question 8

Contra Proferentum rule:

Answer 8

When the words of an exemption clause are vague, they will be interpreted by the courts in the way that is least favorable to the party attempting to exercise it.

Question 9

Legislation which limits exemption clauses?

Answer 9

Unfair Contract Terms Act 1977