Exclusion Causes Contract Law - Week 15a Definition 'Any term in a contract, restricting, excluding or modifying a remedy or a liability arising out of a breach of a contractual obligation.' Exclusion clause versus term defining obligations - - Clause defining obligation of parties is different from exclusion causes - Clauses defining obligations set out what each part should do in a contract. - When parties enter contracts there is usually a term/clause that one party relies on when the other claims liability. - They may be clauses that limit liability or excludes liability, but the aim is the same - reduce the extent of liability. Examples - The company shall not be liable for any loss or damage however 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 7 days of the alleged breach occurring. Rationale for control 'Freedom of contract' versus 'protecting the weaker party' Courts acknowledge the necessity to preserve the sanctity of freedom to contract. But also acknowledges that there may be weaker parties in a contract. Not all contracts are products of good bargaining/bargaining on equal terms. To protect the weaker parties (ensure fairness), and as well as preserve the sanctity of freedom to contract, courts develop separate rules to deal with exclusion causes. Exclusion clauses are seen as a distinct clause from the clause defining parties' obligation Since it is seen as distinct, separate rules were designed to deal with situations that arise with exclusion clauses. Development of Control 19th/20th Century - Common law techniques
'incorporation' 'interpretation/construction' ‘fundamental breach' 1970's onwards - statutory control - Unfair Contract Terms Act (UCTA) 1977 - Consumer Rights Act 2015 Common law - incorporation The question is (as is applicable to all 'terms' generally) 'was the clause part of the contract'? Cf 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. Tests of incorporation 1) Signature - generally conclusive - L'Estrange v Graucob (1934) - unless induced by false statement - Curtis v Chemical Cleaning and Dyeing Co (1951) Plaintiff took her dress for cleaning and signed a document that had a vaguely worded exclusion clause. She queried it but the assistant said the exclusion clause was with regards to beads or sequin on her dress. Dress came back stained, and she sued. Held: there was misrepresentation. Document was signed based on a fundamental mistake. Statement had qualified the exclusion clause. 2) Timing: At what time was the clause brought to your attention? All contract terms must be settled at the time of acceptance. -Olley v Marlborough Court Hotel (1949) Hotel guest was not bound by a notice placed on the wall