exclusion clauses

• exclusion clauses are terms in a contract that exclude or limit liability for a breach of the contract.
• 3 main matters to consider when a clause in a contract in common law has an exlusion clause:

  • whether it is signed
  • whether any notice is incorporated in the contract
  • whether the term is incorporated as a result of previous dealing
• whether the agreement is signed- L'Estrange V Graucob

  written agreement
• whether any notice with the term in it is incorporated in the contract by reasonable notice- Olley V Marlborough Court Hotel
• reasonable notice cases:

  • must be a contractual document with reference to distinction between a document and a receipt -Chapelton V Barry
  • must be reasonable steps to draw the exclusion clause to other party's attention- Parker V SE Railway
  • reasonable notice must be given before conclusion of a contract by acceptance of an offer- Olley
• whether the term is incorporated as a result of previous dealings in the past- Hollier V Rambler Motors
• contra proferentem rule- where there is doubt about the meaning of a term in a contract, the words will be construed against the person who put them in the contract.
• contra proferenteum - Transocean Drilling
• Statutory control of exclusion clauses:

  • Unfai contract terms act 1977
  • consumer rights act 2015
• Unfair Contract Terms Act 1977 provides main protection against exclusion clauses in non-consumer contracts. Contains a test of reasonableness.
• exclusions and limitations void by Unfair Contract Terms Act 1977:

  • s2(1)- a person cannot exclude liability for death or personal injury caused by negligence.
  • s6(1) - implied condition as to title cannot be excluded.
• section 3 Unfair Contract Terms Act- exclusions depending for their validity on a test of reasonableness - Warren V Truprint
• there are 3 tests of reasonableness under Unfair Contract Terms Act:

  • s11(1)- Smith V Bush. whether the insertion of the term is reasonable in light of what was known to parties.
  • s11(2)- covers exclusion clauses involving breaches of implied conditions in Sale of Goods Act.
  • s11(4)- relates to limitation clause. 2 criteria- resources which D could expect to have available, how far it is open to D to cover himself.
• limitation clause- a term in a contract that sets an upper limit on liability for breach of contract.