9 - Exclusion Clauses

Question 1

What is an exclusion clause?

Answer 1

Terms that attempt to exclude or limit liability for a breach of contract.

Question 2

What 3 things make an exclusion clause valid?

Answer 2

• Term must be incorporated by signature, notice or course of previous dealings.
• Term must cover the loss being exempted or limited
• Term must not contravene statute (law)

Question 3

How do signatures work for exclusion clauses?

Answer 3

• A person is bound by what they sign even if they don’t understand
• Signature isn’t valid if obtained by fraud/misrepresentation
• Signature must be done before commencement of the contract

Question 4

How do notices work for exclusion clauses?

Answer 4

• They’re the signs/notices that contains exclusion clauses
• Reasonable steps must taken to notify the other party before contract - therefore doesn’t matter if other party doesn’t understand

Question 5

What’s an example of notices in exclusion clauses?

Answer 5

Thornton V Shoe Lane Parking (1971) - Notice inside car park

Question 6

How do course of previous dealings work in exclusion clauses?

Answer 6

Has to be incorporated
- Used in similar transactions
- Must be frequent/consistent dealings

Question 7

What’s two examples for course of previous dealings?

Answer 7

• Spurling V Brads (1956) - Identical transactions over several years - sufficient

Hollier v Rambler Motors (1972) – 3 or 4 transactions over a 5 year period = insufficient

Question 8

What does it mean when the “term must cover the loss being exempted”?

Answer 8

To provide protection to injured parties, courts interpret exclusion clause strictly - must be very specific.

Question 9

Name an example of a specific exclusion clause

Answer 9

Photo Productions Ltd v Securicor (1980) – wording was VERY detailed to include no liability for fire damage

Question 10

What does it mean when the term must not contravene statute?

Answer 10

It must satisfy:

• Unfair Contract Terms Act (UCTA) (1977)
• Consumer Rights Act (CRA) (2015)

Question 11

What’s Unfair Contract Terms Act (UCTA) (1977) ?

Answer 11

Only applies B2B.

Makes exclusion clauses valid based on whether or not they’re reasonable.

Question 12

Name 2 things that would make an exclusion clause valid

Answer 12

• Excludes death/personal injury from negligence
• Excludes manufacturer’s liability for losses or injury due to defective goods
• Excludes the terms implied by the CRA 2015

Question 13

What’s the requirement for reasonableness for UCTA?

Answer 13

• The bargaining positions of the parties
• Whether any inducement was received to accept the term
• The ability of the party to insure against the liability

Question 14

What’s the Consumer Rights Act (CRA) (2015) ?

Answer 14

Provides statutory control in respect of consumer contracts and consumer notices (e.g. signs in a car park).

Terms between a business and consumer are only binding on the consumer if they are fair.

Question 15

What terms are automatically unenforceable in CRA?

Answer 15

Limiting liability for death or personal injury.

Question 16

What happens when a term isn’t deemed automatically?

Answer 16

The CRA Act requires the term to pass a reasonableness test.

Question 17

When is a term unfair?

Answer 17

• Puts consumer at disadvantage
• Not written in plain, intelligible English
• Contrary to good faith causes a significant imbalance in the parties’ rights and obligations under the contract and this proves to the detriment of the consumer.

Question 18

What happens when a contractual term is open to different meanings?

Answer 18

The most favourable is given to consumers in order to prevent unfair exploitation of customers.