Contract Law - Exclusion Clauses 1 - Lecture 15a Definition · Any term in contract restricting, excluding, or modifying a remedy or a liability arising out of a breach of a contractual obligation Examples: . The company shall not be liable for any loss or damage, how so ever caused' . 'The company will be liable up to a maximum of £500 in relation to any claim' . 'All claims for breach of contract must be notified to the company within seven days of the alleged breach occurring' Rationale for control · Freedom of contract versus 'protecting the weaker party' · 'risk planning' versus 'standard form contracts' Development of control . 19th/20th century - common law techniques 'incorporation' 1. Interpretation / construction 2. Fundamental breach · 1970s onwards - statutory control 1. Unfair Contract Terms Act (UCTA) 1977 2. Consumer Rights Act (2015) Common Law - Incorporation . Question of 'was the clause apart of the terms' - Interfoto Picture Library v Stiletto Visual programmes (1988). . A clause cannot be effective to exclude liability if it is not part of the contract . The rules are based on the principle that a party must have had reasonable notice of an exclusion clause at the time of the contract for it to be effective. Test of incorporation 1. Signature · Generally conclusive - L'Estrange v Graucob (1934) . Unless induced by false statement - Curtis v Chemical Cleaning and Dyeing Co (1951) 2. Timing . Olley v Marlborough Court Hotel (1949) · 3. Previous course of dealing Thornton v Shoe Lane Parking (1971) · Hardwick Game Farm v Suffolk AA (1969) . Hollier v Rambler Motors (1972) 4. Nature of the document · Chapelton v Barry UDC (1940) 5. Reasonable notice - steps taken to draw the attention of the other party . Parker v South Eastern Railway (1877) · Thompson v LMS Railway (1930)
6. Nature of the Clause (onerous) · Spurling v Bradshaw (1956) - 'red hand' test- Per Lord Denning- 'Some exclusion clauses I have seen would need to be printed in red ink on the face of the document with a red hand pointing to it before the notice could be held to be sufficient' . Thornton v Shoe Lane Parking (1971) Common law - interpretation / construction . When it is determined that a clause has been incorporated into a contract, the next issue is whether the clause covers the breach that has occurred. . The wording of the clause must be examined to determine if it applies to the situation in question. · 'Contra proferentem' rule - The clause will be interpreted against the party seeking to rely on it. If there is ambiguity, it will be construed in favour of the claimant: 7. Andrews Bros v Singer & Co (1934) 8. Houghton v Trafalgar Insurance Co Ltd (1954) · Excluding liability for Negligence 1. very specific language must be used 2. Canada Steamship Lines v The King (1952) - 3 principles 3. Monarch