Law Exclusion Clauses

A2 Law Exclusion Clauses

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Common Law

Definition of Exclusion Clause

  • a term in contract that attempts to exclude liability of the party hoping to rely on it
  • example; "the management accept no responsibility for any damage or loss sustained from the use of these facilities, howsoever caused."

Definition of Limitation Clause

  • this is a less onerous version of an exclusion clause
  • this type of clause seeks only to limit the liability of the party attempting to rely on it
  • example; "the management will only be liable to the amount of fifty pounds for any damage or loss incurred to any customer whilst using these facilities."
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By Notice (time of)

  • in order for a clause to be incorporated, notice of it has to be given at the time of, or before, the contract
  • olley v malborough court hotel (1949):
  • mrs olley had booked in and paid at reception in the hotel. unfortunatley, she had items stolen from her room. she sued the hotel and the hotel tried to rely on an exclusion clause in a notice that had been on the back of the bedroom door. the court held the contract had been formed at reception and therefore the clause had not been incorporated into the contract and mrs olley could claim
  • thornton v shoe lane parking (1971):
  • parking subject to a clause must be aware of it at the time of contracting. the claimant takes ticket from machine outside carpark. notice at entrance says, "parking at owners risk." on the ticket it says, "this ticket issued subject to the conditions of issue displayed on the premises." notices inside carpark listed conditions including an exclusion clause covering damages and personal injury. court said they had no chance of renegotiating, only bound by clause brought to customers attention clearly beforehand. high degree of notice required.
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By Notice (reasonableness)

  • the method used to present the terms must be reasonable. if they are on a ticket, those terms wil only be incorporated if it was reasonable to expect them to be there
  • parker v south eastern railways (1877):
  • p had deposited his baggage in the cloakroom of the station, paid and received a cloakroom ticket. when he returned the bag had been lost. he sued for the price of the luggage. the railway company claimed they were only liable for ten pounds, as stated on the back of the cloakroom ticket, where there had been a limitation clause. the front of the ticket said the words, "see back." the CofA held that reasonable notice would occur if the party knew about the clause or there had been reasonable steps taken to bring it to the attention of the customer. reasonable steps would include when, form and seriousness of effect.
  • thornton v shoe lane parking also encapsulates these principles
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By Notice (form)

  • the form of the document used when it had an exclusion clause in it is important
  • the courts ask whether the document is one which a reasonable person would expect to find such a clause
  • chapleton v barry udc (1940):
  • mr chapleton hired two deckchairs, he had followed the instructions on a council notice asking everyone ro rake a ticket from the attendant and keep them ready for inspection. he had put the tickets in his pocket without reading them. when he sat down his chair collapsed and he was injured. he sued the council and they tried to rely on the clause printed on the back of the ticket that purported the exclude liability for any accident or damage. the CofA held that the clause was not part of the contract because the ticket had acted like a receipt, acknowledging payment for hire, and a reasonable person would not have expected it to be contractual in nature.
  • if the clause had been brought to the attention of the party, or they know it is intended to be contractual in nature, or the circumstances in which it was given provided reasonable notice of the terms, it may become a contractual document
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By Signature

  • if a signature is put to a document at the time of contracting, that document becomes part of the contract, regardless of whether it was read or understood
  • le strange v graucob (1934):
  • the buyer of a vending machine signed a hire purchase document without reading it. later when the machine became faulty, she could not claim because the document that she had signed contained a clause excluding liability. it stated, "any express or implied condition, statement or warranty, statutory or otherwise, is hereby excluded." the statement was in very small print but had been incorporated by the signature
  • the only time that this will not appliy is if there has been misrepresentation as to the nature of the document
  • curtis v chemical cleaning and dyeing co (1951):
  • curtis took wedding dress to be dry cleaned and was asked to sign a document that exempted liability from damage. she queried this and was told that it only related to beads or sequins. when dress returned it had a chemical stain down the front but the company couldn't rely on clause as oral assurance was given
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By Course of Dealing

  • if two parties have had a regular course of dealing, and included in those contracts was an exclusion clause, then that clause may be included in later dealings even if the usual formalities have not taken place
  • spurling v bradshaw (1956):
  • the parties had been doing business together for many years. on one occasion, a problem arose with barrels of orange that were found to be empty. the defendant refused to pay the necessary charges, however, an exclusion clause that was incorporated in earlier dealings was held to be valid as the defendant had knowledge of this clause in previous dealings
  • hollier v rambler motors (1972):
  • hollier had left his car at a garage for repair bu the garage burned down. the cause was due to negligence by the garage owner. hollier had used this garage 3-4 times over 5 years. on each occasion he signed a document exempting the garage from liability to damage caused by fire. the garage tried to rely on the clause bu the CofA held that the previous course of dealing was not sufficient to warrant this incorporation as regular course of dealings weren't regular enough
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