Exclusion clauses

exclusion clauses

purports to exclude contracting party's liability for breach in contract. "no liability"

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limitation clause

purports to limit contracting party's liability for a breach of contract

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Regulation/ control of exclusion clauses

common law and statutory regulation

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common law regulation

courts seek to control/ regulate by requiring exclusion clauses to be incorporated into contract and by interpreting exclusion clauses narrowly

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1- Incorporation of exclusion clauses- within contract

exclusion clause must be within a contractual document. should be notified at offer and acceptance stage (Chapleton v Barry)

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previous course of dealing

incorporated on basis of consistent previous course of dealings between parties

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Timing

exclusion must be incorporated into the contract before or at the time of the contract (Shoe Lane Parking)

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Notice

parties relying on the clause must give reasonable notice of clause

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Signature

where contract contained in signed document, party who signs is bound by all term in document, unless fraud or misrepresentation. (L'Estrange)

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2- Interpretation of exclusion clause

(Literal rule). General rule: clear word needed to exclude/ limit liability, therefore, exclusion clause must be identify the type of liability being excluded. Limitation clauses are less strictly interpreted than exclusion clauses

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The Contra Rule

if exclusion clause is unclear, it should be interpreted against the party relying on it

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Statutory Regulations

need for further control to achieve ' fairness'

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Exclusion clauses in consumer contracts (services and goods)- Consumer Rights Act 2015

gives greater protection to consumers

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s.31 and 57 implied term

trader can't exclude or limit liability for breach of an implied term

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s. 65

trader can't reduce lability for death or personal injury

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s.62

All contract terms must be fair, consumer is not bound by unfair terms. a contact is unfair if it is country to the requirements of good faith and it causes significant imbalance in the contracting parties rights and obligations.(Parking Eye v Beavsi

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Unfair Contract Terms Act 1977- exclusion clauses in business contracts

where both parties are contracting in the course of business

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s.2(1)

A business van not exclude liability for death or personal injury

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s.2 (2)

any term which excludes/limits business liability fo loss or damage to property caused by negligence must be reasonable

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s.3

where the contract is on D'** standard form of busine**, any term which excludes or limits liability for breach of contact must be reasonable

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s.6

cannot exclude liability fo breach of contract relating to title of goods (legal authority) and description if goods

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s.11- Reasonableness (on the party to prove)

reasonableness is determined by reface to circumstance at the time the contract was made which we know or which ought reasonably to have been known. Bargaining power or whether C knew or ought to know of the term

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Exclusion in private contracts

neither parties in course of business

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Unfair Contract Terms Act 1977- s2 (1),(2), s 6 + s6*

any term which excludes liability for breach of contract relating to description of good/ quality of good/ fit for purpose of good must be reasonable.

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Exclusion clauses

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