exemption clauses Flashcards
(18 cards)
types of exemption clauses
exclusion clause
limitation clause
exclusion clause meaning
a term in a contract which excludes a party from any liability
if the clause was not there it would be a breach of contract
limitation clause meaning
a term in a contract which limits liability of a party
why do we have exemption clauses
to allocate risk between parties in a contract
limit the exposure to risk
what has to be done for an exemption clause to be enforceable
be part of the terms in the contract
cover the loss which has occurred in the circumstances in which they occurred
has to be legal
ways to incorporate exemption clauses
by signature
by notice
by consistent and frequent course of dealing
explain incorporation by signature
if the document is signed then you are bound to the terms even if not read
if they are incorrectly explained they can be argued against
explain incorporation by notice
incorporated if the party has actual or reasonable notice of the exemption clause
reasonable notice is tested
if clause is more unreasonable then there needs to be more notice
is the notice on a contractual document
given before or at the time of the contract
incorporation by consistent and frequent course of dealing
if there are consistent and frequent dealings we assume that the parties know that the clause is in the terms
if it is mentioned in the first dealing
types of protection for consumers
judicial control through common law
statutory controls - UCTA-1977
what are judicial controls
contra proferentum
courts are more willing to follow limitation clauses
if clause is clearly understood it cannot be denied even if there is a fundamental breach
exemption clause dose not always need to be a contractual document
if the clause is free from ambiguity then it is valid even if not seen
what is the legislation for statutory control
Unfair Contract Terms Act
what year was the unfair contracts terms act
1977
what does the Unfair contracts terms act do
provides a frame work for statutory control of the clause B2B
UCTA-1977
Section 1 (3)
business liability
must be used in the course of business or from premises used for the purpose of business
UCTA-1977
Section 2 (1)
some exemption clauses are VOID e.g. death and personal injury (not personal property)
protection under the act
clauses which exclude or limit liability:
-for any damage caused by negligence
-in consumer contracts which is not specifically covered in the act
-in business contracts entered into on standard terms
-breach of the implied terms as to title, description, satisfactory quality, fitness for purpose and sale by sample
-for misrepresentation
test for reasonableness
burden of proving whether an exemption clause is reasonable is on the party seeking to rely on it
term has to be fair and reasonable taking into account all the circumstances that were known or should have been known when the
contract was made
the resources available to the party seeking to limit the liability -more resources more insurance less reasonable clause
who is in the best position to insure against the risk of loss created by the breach
if buyer could have used other suppliers - monopoly less reasonable
induced into the contract
if the buyer should have know the terms e.g. previous dealings
if the clause applies where the buyer fails to meet a condition - more reasonable
whether the goods were changed as a special order -more reasonable
