OCR A2 Law - The Law of Contract - Exclusion Clauses (1)

Intro/Define: Exclusion clauses are exempt terms usually written before the contract. The clauses can either 'exclude liability' (exclusion clauses), or they can limit liability (limitation clause) - the liability is usually a duty of care.

AO2: Judges and Parliament don't look favourably on such clauses because they are destructive of consumer rights... there have been many ways in which both have limited an exclusion clauses effect.

For a clause to be valid it must be: 1. A term of the contract i.e. it must be 'incorporated'; 2. It must be valid under the rules of 'contra proferentum' (precise language); 3. Be valid under 'statute'.

Incorporation: Signed/Unsigned documents

Signed documents: If a party signs a document which includes an exemption clause in it, the courts have held they are bound by it i.e. they have read and understood it.

CASE: "L'estrange v Graucob". A contract was made for a vending machine but it was defective. A clause in the contract which the buyer signed, excluded liability if the machine was defective. HELD: As claimant signed the document she was bound by the courts.

AO2: This was classed as a fair and logical decision.