Topic 4 - Exemption clauses Flashcards
(39 cards)
What are the three points to consider when determining if a party can rely on an exemption clause?
- Incorporation of the clause into the contract
- Construction of the clause
- 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 analysis of an exemption clause?
Does the clause cover the alleged breach(es) and resulting loss?
What is the effect of the Unfair Contract Terms Act 1977 on exemption clauses?
It imposes limits on liability avoidance through contract terms
List the common elements that exemption clauses may include.
- Exclusion or limitation of liability
- Types of claims or duties the exemption relates to
- Types of loss the exemption relates to
What is the contra proferentem rule?
Exemption clauses are construed against the party seeking to rely on them
In the case of Houghton v Trafalgar Insurance, what did the court conclude about the term ‘load’?
It did not refer to passengers
True or False: Clear words must be used to exclude liability for negligence.
True
What are the Canada Steamship rules?
Guidelines for determining if exemption clauses cover negligence
What is the doctrine of privity?
A party outside the contract cannot benefit from its terms
What does the Unfair Contract Terms Act 1977 regulate?
Exemption clauses limiting or excluding liability
What is the definition of ‘business liability’ under UCTA?
Liability arising from actions done in the course of a business or from business premises
Under section 2(1) of UCTA, can a person exclude liability for death or personal injury resulting from negligence?
No, it is void
What requirement must be met to exclude liability for other losses resulting from negligence under UCTA?
The term must satisfy the requirement of reasonableness
What does section 3 of UCTA state about liability exclusions in written standard terms of business?
Exclusion or limitation clauses must pass the reasonableness test
Fill in the blank: Section 6(1A) of UCTA provides that liability for breach of sections 13-15 of the Sale of Goods Act 1979 cannot be excluded or restricted except in so far as the term satisfies the requirement of ______.
reasonableness
What does the UCTA reasonableness test require?
The term must be reasonable in the context of the contract
In St Albans City Council v. International Computers Ltd, how did the court define ‘written standard terms’?
Even negotiated terms can be considered standard if they remain effectively untouched
What is the significance of the case Persimmon Homes Ltd v Ove Arup & Partners Ltd regarding exemption clauses?
It questioned the application of the Canada Steamship rules to commercial contracts
What contracts are outside the ambit of s 3 of UCTA?
Contracts concluded other than on ‘written standard terms’
This indicates that individually negotiated business-to-business contracts are not regulated by UCTA unless they involve areas covered by UCTA.
What is the UCTA reasonableness test as per s 11(1)?
The term must be a fair and reasonable one to be included, considering the circumstances known or contemplated by the parties when the contract was made.
When is the UCTA reasonableness judged?
At the time the contract was made, not at the time the term is considered by the Court.
What does s 11(2) of UCTA provide regarding the reasonableness test?
It specifies that the factors in Schedule 2 should be taken into account when applying the reasonableness test.
List the guideline factors in Schedule 2 that should be considered when applying the reasonableness test.
- Strength of the bargaining positions of the parties
- Inducement to agree to the term
- Customer’s knowledge of the term
- Reasonableness of expecting compliance with conditions
- Special order adaptations of goods
