Exemption Clauses Flashcards
(21 cards)
What is an exemption clause?
A contractual term that purports to exclude or limit liability that would otherwise attach to one of the parties. It may relate to contractual or tortious obligations.
What is the difference between exclusion and limitation clauses?
Exclusion clauses attempt to remove liability entirely.
Limitation clauses place a cap on the amount recoverable (e.g. damages limited to £300,000).
What are the three steps to determine whether an exemption clause can be relied upon?
Incorporation – Is the clause part of the contract?
Construction – Does the clause cover the breach/loss in question?
Statutory control – Is the clause valid under UCTA or CRA?
What does construction refer to in the context of exemption clauses?
Construction refers to the interpretation of the clause: whether its wording covers the breach and loss alleged.
What is the contra proferentem rule?
If there is ambiguity in an exemption clause, it is construed against the party seeking to rely on it (the ‘proferens’). Applied less strictly where the clause limits rather than excludes liability
Is contra proferentem applied in commercial contracts between equal parties?
It is applied with less rigour or not at all
Can a clause exclude liability for negligence?
Yes, but only with clear wording. If not explicit, it must be unambiguously wide enough to include negligence
What are the Canada Steamship guidelines?
If the clause expressly refers to ‘negligence’, it may be effective.
If not, courts ask whether the wording is wide enough to cover negligence.
If another basis of liability exists, the clause may not apply.
How are exemption clauses incorporated into contracts?
By signature
By notice before or at the time of contracting
By a consistent and regular course of dealing
Why are incorporation rules particularly strict for exemption clauses?
Because they can limit or deny remedies, courts require reasonable steps to bring them to the attention of the other party
When does Unfair Contract Terms Act (UCTA) apply?
to business-to-business contracts.
Where one or both parties act in the course of business.
It only applies to exemption clauses.
When does UCTA not apply?
To consumer contracts (CRA 2015 applies).
Where neither party is acting in business.
What does s2(1) of UCTA say about personal injury or death caused by negligence?
Exclusion is void – liability cannot be excluded or restricted.
Can liability for other loss caused by negligence be excluded?
Only if the clause passes the reasonableness test
Can liability for breach of SGA 1979 implied terms (ss13–15) be excluded?
Only if reasonable
What is the UCTA reasonableness test?
Whether the clause was fair and reasonable to include at the time the contract was made
When does the CRA 2015 apply?
To consumer contracts between a trader and a consumer. It regulates both exemption clauses and all unfair terms.
What clauses are void under s31, s47, and s57 CRA?
s31: Exclusion of terms under ss9–11 (goods)
s47: Exclusion of terms under ss34–36 (digital content)
s57: Exclusion of s49 (services – reasonable care and skill)
Can a term under s49 be limited rather than excluded?
Yes, but the limit cannot prevent recovery of the price paid.
What does s62 CRA say about unfair terms?
A term is not binding if it causes a significant imbalance, contrary to good faith, to the consumer’s detriment.
What terms are exempt from fairness review?
Terms that specify the main subject matter
Terms that set the price, provided they are transparent and prominent
