Exemption Clauses

Question 1

Incorporation by Signature

Answer 1

If a party signs the contract, they are bound by all its terms, including exemption clauses, even if they didn’t read it
Case: L’Estrange v Graucob (1934)

Question 2

Incorporation by Notice require

Answer 2

Exemption clauses must be clearly communicated before or at the time of contract formation.
Case: Parker v South Eastern Railway (1877)

Question 3

Course of Dealing

Answer 3

If the same exemption clause has been used consistently in past dealings, it may be implied in the current contract.
Case: Spurling v Bradshaw (1956)

Question 4

Onerous / Unusual Terms

Answer 4

If a term is particularly harsh or unusual, the other party must be made aware of it in a clear way.
Case: Interfoto v Stiletto (1989)

Question 5

Contra Proferentem Rule

Answer 5

Ambiguous or unclear clauses will be interpreted against the party who drafted them.
Case: Andrews Bros v Singer (1934)

Flashcard 6:

Question 6

Misrepresentation

Answer 6

If a false representation is made about the clause, it may render the clause void.
Case: Curtis v Chemical Cleaning (1951)

Question 7

Doctrine of Fundamental Breach

Answer 7

Exemption clauses do not protect against serious breaches unless the clause clearly covers that situation.
Case: Photo Production v Securicor (1980)

Question 8

What is UCTA 1977 (Unfair Contract Terms Act 1977)?

Answer 8

UCTA regulates the enforceability of exemption clauses, specifically in business-to-business contracts.
Exemption clauses cannot exclude liability for death or personal injury caused by negligence.

Question 9

Section 2 UCTA 1977

Answer 9

Exemption clauses cannot exclude liability for death or personal injury caused by negligence.

Question 10

Section 3 UCTA 1977

Answer 10

If one party uses standard terms, exclusion of liability for negligence can only be valid if it is reasonable.

Question 11

Section 8 UCTA 1977

Answer 11

Exemption clauses cannot exclude liability for implied terms (e.g., under the Sale of Goods Act) unless reasonable.

Question 12

Consumer Rights Act 2015 (CRA)

Answer 12

Definition: CRA bans unfair terms and protects consumers’ rights.
Terms must be transparent and fair (s62). Unfair terms are not binding.
Cannot exclude liability for death/personal injury due to negligence (s65).
Cannot exclude statutory consumer rights (goods must be of satisfactory quality, fit for purpose).

Question 13

What is an Exemption Clause?

Answer 13

A term in a contract that attempts to limit (limitation clause) or exclude (exclusion clause) one party’s liability for certain types of breaches or losses.

Question 14

What is an Unfair Term?

Answer 14

A term in a contract that causes a significant imbalance in the rights and obligations of the parties, to the detriment of the consumer.

Question 15

What is the Contra Proferentem Rule?

Answer 15

The rule that ambiguous clauses are interpreted against the party that created them

Question 16

What is the Test of Reasonableness?

Answer 16

A test under UCTA that checks if an exemption clause is fair and reasonable in light of the circumstances at the time of contract formation.
Key Factors: Bargaining power, knowledge of the clause, alternatives.