Limitation Clauses Flashcards
What are the two types of exclusion clauses?
- Limitation Clauses
2. Exclusion Clauses
What is the function of exclusion clauses?
Allocation of risk.
When are exclusion clauses generally not problematic?
Where the two parties have equal bargaining power.
When is particular attention paid to exclusion clauses?
Consumer Contracts - No choice, little bargaining power, have to accept the clause.
L’Estrange v Graucob
No liability if vending machine failed - less consumer protection legislation - Courts upheld it as it was incorporated by signature.
Two requirements for an exclusion clause to be enforced?
Reasonable or sufficiently fair.
What do the courts look at when looking at exclusion clauses?
Type of contract - Consumer or Business
Bargaining power.
What can limitation clauses do?
Limit by money or limit by time - e.g. liability only for six months, liability only for x amount
How do courts treat exclusion clauses as opposed to limitation clauses?
Much more harshly - must be a good reason for doing that.
Karsales v Wallis Facts
Car sold with clause stating no condition or warranty that the car is roadworthy. Inspected looked roadworthy, by time was inspected was not roadworthy.
Karsales v Wallis Ratio
Fundmental Breach - You can’t exclude liability liability for fundamental breach.
Photo Productions v Securicor - Facts and Ratio
Courts were saying that all exclusion clauses are invalid - CoA said no, you can’t prevent people from excluding their liability - freedom of contract.
Right before - Statute - UCTA 1977
Courts can not simply strike down exclusion clauses - Security guard employed by securicor, had to look after building, lit a cigarette threw away match, and set a fire that destroyed part of the building. Not intentional. Entire purpose was to secure the building but on the other hand it’s not normally negligence to smoke a cigarette. In this particular place, under no circumstances, liable for fault by the company.
Argued there was fundamental breach. CoA didn’t agree. Purpose was for security purposes, did not promise that no damage would occur.
What three things should you ask when dealing with a potential exclusion clause?
1: Is the clause incorporated in the contract?
2: Does the clause, when properly incorporated, cover the loss should it occur?
3: Is there another rule of law invalidating the clause?
Curtis v Chemical Cleaning [1951] 1 KB 805 Court of Appeal - Ratio
The assistant had misrepresented the effect of the clause and therefore could not rely on the clause in the form even though the claimant had signed it.
City of Westminster v Mudd
Collateral Contract that he could sleep there even though original contract said he could not.
Olley v Marlborough Court - Ratio
Notice must be given at or before time of contracting.
Chapelton v Barry - Ratio
Notice must be given in a place where you would expect to see contractual terms and conditions - Receipt is not a place where you would expect to see them.
You would expect however, at the back of a ticket.
Parker v South Eastern Railway - Ratio
If you knew there was writing on the ticket, you would be bound, even if you have not read the conditions.
If you did not know, then you would not be bound.
General principle that someone should take reasonable steps to bring it to attention of customer.
Spurling v Bradshaw and Interfoto v Stilleto - Ratio
If unusual term or onerous, the more notice must be brought to it.
When are courts more likely and less likely to consider terms to be incorporated?
Business Contracts - British Crane Hire v Ipswich Plant Hire.
Consumer Contracts - McCutcheon v Macbrayne
Hardwick Game Farm v Suffolk - Ratio
If you give actual or constructive knowledge of a term - what you reasonably lead the other party to believe.
Overriding Oral Warranty Case
Evans v Merzario - Overriding oral warranty that overrode the terms of the written agreement. Overriding oral promise that no containers would be shipped on deck overrode general exclusion clause.
