Exemption clauses Flashcards
(36 cards)
What is an exemption clause?
A contractual term that purports to limit or exclude a liability that would otherwise attach to one of the contracting parties.
What is a limitation of liability clause?
Typically caps liability in relation to particular events at a particular sum.
What might a supplier do to limit its liability in a contract for the installation of a computer system?
Limit its liability for any damage caused to the purchaser’s property as a result of its negligence to a specific sum.
What does the term ‘exclusion clause’ suggest?
The type of exemption clause which excludes (rather than only limits) liability.
What are the three points to consider when evaluating an exemption clause?
- Incorporation
- Construction
- Statutory controls
What does incorporation refer to in the context of exemption clauses?
Whether the exemption clause is part of the contract.
What is the focus of the construction of exemption clauses?
Whether the clause, as drafted, covers the alleged breach(es) and resulting loss.
What are the statutory controls affecting exemption clauses?
The effect of the Unfair Contract Terms Act 1977 and the Consumer Rights Act 2015.
What are the typical elements included in exemption clauses?
- Statement of whether liability is excluded or limited
- Statement of which types of claim/duties the exemption relates to
- Statement of which types of loss the exemption relates to
What does the rule contra proferentem state?
If there is any doubt as to the meaning and scope of the exemption clause, the ambiguity will be resolved against the party seeking to rely upon it.
In which case was the contra proferentem rule applied?
Houghton v Trafalgar Insurance [1954] 1 QB 247.
What must be used clearly in an exemption clause to exclude liability for negligence?
The word ‘negligence’ itself.
What are the two categories referenced in the Canada Steamship rules?
- Cases where the only basis for liability is negligence
- Cases where the party will be liable irrespective of negligence
What does the doctrine of privity establish?
A party outside the contract cannot benefit from its terms or have an obligation imposed upon it by the contract.
What does the Unfair Contract Terms Act 1977 (UCTA) aim to achieve?
Impose further limits on the extent to which liability can be avoided by contract terms.
Which contracts does UCTA not apply to?
Consumer contracts.
What is defined as ‘business liability’ under UCTA?
Liability for breach of obligations or duties arising from activities done in the course of a business.
What does Section 2(1) of UCTA state regarding liability for death or personal injury?
A person cannot exclude or restrict liability for death or personal injury resulting from negligence.
What does Section 2(2) of UCTA allow regarding other loss resulting from negligence?
Exclusion or restriction of liability for negligence is permitted only if it satisfies the requirement of reasonableness.
What is the effect of an attempt to exclude or restrict liability for death or personal injury resulting from negligence?
Any attempt will be void
Under UCTA, can a person exclude or restrict liability for other loss resulting from negligence?
Only if the term or notice satisfies the requirement of reasonableness
What does Section 6(1A) of UCTA state regarding liability for breach of statutory implied terms about quality of goods?
Liability cannot be excluded or restricted except if the term satisfies the requirement of reasonableness
What is the key requirement for excluding liability for breach of contract under UCTA?
The term must pass the reasonableness test
What does the UCTA reasonableness test require?
The term must be fair and reasonable considering the circumstances at the time the contract was made
