part 4

• What are the most common types of unfair terms in contracts?

  Exemption clauses
• What do exemption clauses in a contract do?

  They exclude or limit a party's liability for breach of contract or negligence
• What are the two types of exemption clauses?

  • Exclusion clauses: seek to totally exclude liability
  • Limitation clauses: limit liability to a specified sum or time
• What legislation governs exemption clauses in business-to-business contracts?

  Unfair Contract Terms Act 1977 (UCTA)
• What legislation governs exemption clauses in business-to-consumer contracts?

  Consumer Rights Act 2015 (CRA)
• What are the three questions courts ask to test the effectiveness of an exemption clause?

  1. Is the clause an integral part of the contract?
  2. Does the wording cover the breach that has arisen?
  3. Does the clause comply with UCTA or CRA?
• What is the policy issue regarding exemption clauses?

  It involves the balance between freedom to contract and potential abuse of power
• What does the signature of a party signify in a signed document?

  That they have read and agreed to the terms
• What was the outcome of L'Estrange v Graucob (1934)?

  The court held that signing the contract bound the party to the exclusion clause
• What must occur for an over-riding oral representation to affect a signed document?

  It must be made by the other party
• What was the significance of Curtis v Chemical Cleaning & Dyeing Co (1951)?

  The court held that misrepresentation about the clause invalidated the reliance on it
• What is required for incorporation by unsigned documents?

  The affected party must have notice of the term before or at the time of contracting
• What was the outcome of Olley v Marlborough Court Hotel (1949)?

  The court held that the notice was not incorporated into the contract due to timing
• What did the court decide in Chapleton v Barry UDC (1940)?

  The ticket was not part of the contract as it was received after the contract was made
• What was the ruling in Thornton v Shoe Lane Parking (1971)?

  The terms on the ticket were too late to be part of the contract
• What must happen for unusual or onerous terms to be incorporated into a contract?

  • They must be explicitly drawn to the attention of the affected party.
  • This applies to any onerous or unfair term, not just exemption clauses.
• What was the outcome of Interfoto Picture Library Ltd. v Stiletto Visual Programmes (1989)?

  The court held that the onerous term was not incorporated due to lack of explicit notice
• What does the course of dealing refer to in contract law?

  It refers to the history of transactions between the parties
• What was the ruling in Spurling v Bradshaw (1956)?

  The clause was incorporated due to the previous course of dealings
• What was the outcome of McCutcheon v MacBrayne (1964)?

  The court held there was no regular course of dealing, so the term was not incorporated
• What is the contra proferentem rule in contract law?

  • Ambiguities in a clause are interpreted against the party seeking to rely on it.
  • This protects the affected party from unfair terms.
• What was the ruling in White v John Warwick & Co Ltd (1953)?

  The clause was ambiguous and did not protect the defendant from negligence
• What guidance did Lord Morton provide in Canada Steamship Lines Ltd v The King (1952)?

  Exclusion clauses for negligence must be express and clear
• What was the outcome of Photo Production Ltd v Securicor Transport Ltd (1980)?

  The exclusion clause was upheld as it clearly covered negligence
• How do limitation clauses differ from exclusion clauses in contract law?

  • Limitation clauses are viewed more favorably by courts.
  • They relate to risks, remuneration, and insurance possibilities.
• What did Lord Wilberforce state about limitation clauses in Ailsa Craig Fishing Co v Malvern Fishing Co (1983)?

  Limitation clauses do not need to be construed as strictly as exclusion clauses
• What was the ruling in George Mitchell (Chesterhall) Ltd v Finney Lock Seeds Ltd (1983)?

  The limitation clause was deemed unreasonable
• What happened to the two ships in the harbour?

  They sank due to incompetence.
• What does the clause in the contract limit Securicor’s liability to?

  £1,000.
• How do limitation clauses differ from exclusion clauses according to HL?

  Limitation clauses are construed less strictly than exclusion clauses.
• What factors do courts consider when interpreting limitation clauses?

  Risks, price received, and insurance possibilities.
• In George Mitchell (Chesterhall) Ltd v Finney Lock Seeds Ltd, what did GM buy?

  30lbs of winter cabbage seed.
• What was the cost of the cabbage seed purchased by GM?

  £201.60.
• What was GM's claim for damages after planting the seed?

  £60,000 for loss of the crop.
• What did FLS argue regarding their liability?

  They were liable only for the cost of replacing defective seed or refunding payment.
• Why did HL hold that the limitation clause in the case was not reasonable?

  Because D admitted to making ex gratia payments in similar situations.
• What does the Unfair Contract Terms Act 1977 (UCTA) aim to achieve?

  Maintain 'freedom to contract' in B2B contracts.
• What types of liability does UCTA cover?

  Exemption clauses for business liability and some tortious liability.
• What contracts are specifically excluded from UCTA?

  Contracts of insurance, land interests, IP, companies, securities, shipping, and employment contracts.
• What is the effect of a clause excluding liability for negligence resulting in death or personal injury under UCTA?

  It is void.