Exemption Clauses

Question 1

Three ways clauses are incorporated into a contract:

Answer 1

Signature, Reasonable Notice and Previous Course of Dealings

Question 2

What happens if there is any ambiguity about the meaning of a clause? (contra proferentem rule)

Answer 2

The clause will be construed against the person seeking to rely on it

Question 3

What should a party do if they wish to exclude liability for negligence?

Answer 3

Use clear and unambiguous language

Etc: The Company is not responsible for damage caused by fire to customers’ cars on the premises

This clause did not cover damage caused by the defendants negligence as it was unclear.

Question 4

What does the Unfair Contract Terms Act 1977 govern?

Answer 4

buisness to buisness

Question 5

What does the CRA 2015 govern?

Answer 5

business to consumer

Question 6

What are the three possible outcomes when applying UCTA 1977

Answer 6

• the clause is void for death/personal injury caused by negligence or breach
• the clause is valid and the defendant can rely on it
• the clause is subject to the reasonableness test, defendant can rely on if reasonable.

Question 7

The reasonableness test (Sch2 guidelines)

Answer 7

The clause must be fair and reasonable

• What was the bargaining power of the parties? (equal?)
• Any inducements (accept or else…)
• Knowledge of the clause (‘Other matters’ - vague )
• How practical is the clause? 7 day vs 30 days?

Question 8

When will UCTA 1977 prevent a defendant from relying on an exemption clause?

Answer 8

UCTA 1977 will prevent reliance on a clause if:

It attempts to exclude liability for death or personal injury caused by negligence (s 2(1).

It attempts to exclude liability for breach of the implied term as to relating to goods [description, quality, fitness for purpose]

It attempts to exclude liability for breach of an express term

Question 9

When does UCTA not apply in contracts?

Answer 9

When it is a fully negotiated contract

Question 10

Factors the courts use to decide whether a limitation clause is reasonable:

Answer 10

• resources the defendant has available for them if liability arises
• insurance cover

Question 12

Under CRA 2015 what rights cannot be excluded? hint - 4

Answer 12

satisfactory quality

particular purpose

goods as described

right to provide service with reasonable care and skill

Question 13

What are the four ways that a term in a contract may not be binding on a customer/consumer

Answer 13

1. It restricts liability for satisfactory quality, particular purpose, described goods and reasonable care and skill
2. makes putting something right subject to a restrictive condition
3. someone put at a disadvantage for pursuing the right
4. restricts rules of evidence

Question 14

Can a trader exclude liability for selling goods that are not of satisfactory quality?

Answer 14

No, under Section 31 of the CRA 2015, liability for breach of satisfactory quality (s 9) cannot be excluded or restricted

Question 15

What happens if a trader includes a clause in a contract that limits liability for goods not matching their description?

Answer 15

The clause will not be binding on the consumer, as liability for breach of description (s 11) cannot be excluded under Section 31.

Question 16

Can a trader impose a restrictive condition on a consumer’s right to claim for faulty goods?

Answer 16

No, under Section 31, any term that imposes a restrictive or onerous condition on the consumer’s right to claim for faulty goods is not binding.

Question 17

Example of an onerous condition

Answer 17

Buy a laptop in Birmingham and head office is in Paris - clause says defects can only be taken to Paris for inspection.

Question 18

General rule with exemption clauses and 3rd parties:

Answer 18

Exemption clauses in contract cannot protect a third party

Question 19

What is the exception for a third party relying on an exemption clause?

Answer 19

If they are named or identified as a member of a class [employees]

Question 20

If a consumer buys a washing machine that breaks down within a week, can the trader exclude liability for the defect?

Answer 20

No, the trader cannot exclude liability for breach of satisfactory quality (s 9) under the CRA 2015.

Question 21

If a consumer buys a laptop described as “16GB RAM” but receives one with “8GB RAM”, can the trader limit liability for the incorrect description?

Answer 21

No, liability for breach of description (s 11) cannot be excluded or restricted under Section 31

Question 22

If something is installed without reasonable care or skill, what are the clients rights?

Answer 22

1. Repeat performance
2. [price reduction if not reasonable time]

Question 23

If repeat performance cannot be carried out in a reasonable time [3 weeks etc] then what is the client entitled to?

Answer 23

Price reduction

Question 24

If the customers terms and conditions are never seen, there was no consistency in the client’s dealings (although there had been a lot of them) and in any event its Ts & Cs were in small print.
Is there a contract?

Answer 24

There was a contract but on neither party’s terms and conditions.

Question 25

What happens if the innominate term of reasonable care and skill is breached?

Answer 25

If the breach is serious enough, it will allow the innocent party to terminate the contract and claim damages for the breach. If, however, the breach is not sufficiently serious, the innocent party will only be able to claim damages. If they wrongly terminate, they may themselves be in breach of contract

Question 26

if the business is sold, what is this an example of [misrepresentation]

Answer 26

recission being barred.

Question 27

if the cost of rectifying the problem is more than 1/14th of the price, then due to the doctrine of complete performance, what are they entitled to

Answer 27

not entitled to the balance of the contract