Exemption Clauses. Flashcards
(46 cards)
What is an exemption clause?
○ Provide that one party will not be liable in certain situations.
Defeats or limits liability for a certain term.
In what ways can an exemption clause be beneficial?
Allocates the risk between parties.
What is a key issue with exemption clauses?
How it is incorporated
What is the freedom of contract theory?
○ Insists that the choice is of the parties and not of the courts.
Parties can bargain with or without exemption clauses, but they must live with the consequences of that bargain.
What do the courts object to?
-The abuse of exemption clauses.
What do many companies offering a particular type of service use?
Standard forms which contain exemption clauses and so there is no real choice, often one sided.
How are the exemption clauses often formatted?
Long, boring and in tiny writing to deter people from reading it.
How come unreasonable exemption clauses are not stated as invalid?
○ Photo production v Securior (1980):
Courts had no common law power to strike down unreasonable exemption clauses.
What methods do the courts adopt?
Incorporation and interpretation.
What is in place for businesses only to tackle exemption clauses?
The Unfair Contract Terms Act 1977 (UCTA)
What is in place for consumers, to tackle exemption clauses?
The Consumer Rights Act 2015.
When is an exemption clause incorporated into a contract?
if it is contained in a single, contractual document.
What is allowed by the courts in regards to when the contract took place?
Where an exemption clause is notified on the back of a ticket, the notice will be sufficiently contemporaneous with the contract even though technically the contract will have taken place a split second before the ticket was handed over.
When is the notice a contractual one?
If the notice forms part of the contract.
When is the notice without contractual significance?
If the notice does not form part of the contract.
What is required for the existence of terms?
Only reasonable notice for the existence of terms and not their detailed contents.
What is required for onerous or unusual terms?
A higher degree of notice.
What is course of dealing?
If the parties have contracted on certain terms in the past.
What is trade custom?
It’s possible to incorporate a term on the ground that it is so common in the parties’ area of business that they must have intended it to be a term of the contract.
What does contra proferentem mean?
‘Against the person proffering it, or putting it forward’ and the exemption clause will be interpreted against the person seeking to rely on it so as to exclude their liability.
What is a rule around contra proferentem?
The person responsible for including the clause in the contract has the opportunity to make the wording clear and so should be the one to lose out if there is any ambiguity.
What is it about fundamental breach?
Some terms are so fundamental to the purpose of the contract that it is almost inconceivable that the parties could have agreed to exclude liability for their breach.
What are limitation clauses?
A limitation clause does not completely absolve a party from liability but instead places a limit, a ceiling, on the maximum liability.
What is the UCTA’s role where a business seeks to restrict/limit its liability?
Focuses on a n contract where a business is seeking to restrict/limit its liability.
Some businesses are much more powerful than others and their exercise of this power needs to be scrutinized under the Act which looks carefully at their attempts to exclude ‘business liability’ because of the inherent risk of abuse.
