Exclusion And Limitation Clauses

Question 1

What is an exclusion clause

Answer 1

Seeks to exclude liability totally for one of the parties, if there is a contractual breach or negligence

Question 2

What is a limitation clause

Answer 2

Aims to cap how much one party has to pay if they break the contract or are negligent.

Question 3

What is the purpose of exclusion/limitation clauses

Answer 3

act as pre emotive measures of protection if a claim were to made against them following some fault on their part

Question 4

What is ‘contra proferentem’

Answer 4

‘Against proferror’ - courts will read exclusion clauses in a way that favours the party that did not make the clause

Question 5

What are the problems with exclusion clauses

Answer 5

• can be good business dealings but sometimes they’re considered unfair to other party
• measures put in place by common law + parliament to restrict their use/effectiveness

Question 6

What 2 things must exclusion clauses be in order to be enforceable

Answer 6

• be incorporated into the contract - was the clause ‘part of’ the contract
• be interpreted by the courts - did the clause cover the issue that occurred

Question 7

What 3 ways can incorporation of an exclusion clause happen

Answer 7

• signature
• reasonable notice
• course of dealing

Question 8

Outline ‘signature’ as a way incorporation of an exclusion clause can happen

Answer 8

• if a party has signed a document, terms included in it will be binding on the signature
• even if they haven’t read/understood

Question 9

What is the case law for ‘signature’ as a way incorporation of an exclusion clause can happen

Answer 9

L’estrange v graucob

Question 10

Outline ‘reasonable notice’ as a way incorporation of an exclusion clause can happen

Answer 10

Party relying on term must take reasonable steps to ensure other party has notice of term (knowledge of existence)

Question 11

What is the case law for ‘reasonable notice’ as a way incorporation of an exclusion clause can happen

Answer 11

Parker v south eastern railway

Question 12

Outline ‘course of dealing’ as a way incorporation of an exclusion clause can happen

Answer 12

• exception clause can be incorporated based on a regular and consistent course of dealing

Question 13

What is the case law for ‘course of dealing’ as a way incorporation of an exclusion clause can happen

Answer 13

McCutcheon v David MacBrayne

Question 14

How do courts limit the effectiveness of an exemption clause

Answer 14

courts will use the exact wording of the clause - its ‘ordinary and natural meaning’
- andrews brothers v singer

Question 15

What does the statue in the UCTA 1977 act state

Answer 15

Applies to business to business contract - Some types of exclusions/ limitation clauses are void and never effective e.g. death/personal injury caused by negligence