17692035
Description
Flashcards by Sam Grimley, updated more than 1 year ago
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Created by Sam Grimley
about 5 years ago
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| Question | Answer |
| Definition of an exemption clause, and case. | Photo v Securicor [1980] Held: Lord Diplock defined an exemption clause as a clause ‘which excludes or modifies an obligation, whether primary [primary obligations are those contained in the contract], general secondary or anticipatory secondary [secondary obligations are those which arise automatically by law when a contract term is breached]’. |
| What are the 2 main theories or approaches to exemption clauses? | 1. Definitional view - treat exemption clauses like any other term. Laissez Faire - freedom of contract. 2. Exclusory approach - exemption clauses are different to other terms because they take away liabilities that they would otherwise be under. Paternalistic, interventionist. |
| Why is the Exclusory Approach gaining favour? | Because of the large number of standard terms contracts being used in the global, digital marketplace. |
| When examining the validity of exemption clauses, what is the process of analysis? What are the hurdles the clause must cross in order to be valid? | 1. Incorporation – is the exemption clause part of the contract? See ticket cases / car park cases / deck chair. 2. Construction – (another word for interpretation) is the clause, as drafted, effective in excluding or limiting liability? See three hurdles of Canada Steamship, caveated by Persimmon Homes. 3. Statutory controls – what is the effect on the clause of the Unfair Contract Terms Act 1977? |
| Where can exemption clauses be found? | Exemption clauses are commonly found in the small print of standard form conditions, they can alsobe found on wall notices, on shop counters, on the backs of tickets, invoices and receipts and, in one case, on the cover of a cheque book. |
| What are the 3 ways an exemption clause can be INCORPORATED in contract? | (1) signature, (2) reasonable notice, or (3) a course of dealing. |
| When and how must incorporation occur? | (a) at or before the time of contracting and (b) the clause must appear on a contractual document. |
| INCORPORATION - REASONABLE NOTICE - CONTRACTUAL DOCUMENT. Give an example where the courts deemed that the document containing the exemption clause was not contractual in nature. | Chapelton v Barry Urban District Council [1940] Facts: Mr Chapelton saw some deckchairs with a sign next to them listing prices for hire. No conditions were stipulated on the sign. He found an assistant, paid for the deck chair, and received a ticket. On the ticket was printed the words: ‘The council will not be liable for any accident or damage arising from the hire of the chair’. The chair collapsed and Mr Chapelton sued. Held: the ticket was regarded to be a receipt or voucher, as the contract had already been completed at the time it was handed over. Any terms contained thereon could not be binding. Note that not all receipts will fail to incorporate terms into the contract; it depends on the facts and whether it is reasonable to expect to find terms of the contract on the particular receipt in question. Dispute: When is it reasonable for a receipt to contain contractual terms? The question is whether the person, to whom it was handed, could reasonably know that it was intended to have contractual effect. |
| INCORPORATION - How effective is incorporation through signature? Give case law. The is the general rule. | General rule: signature binds. So long as there is no misrepresentation in the process of contracting, signiture makes the terms of the contract binding, whether or not both parties had read and understood them. Until modern rules surrounding unfair terms, this caused some hardship. L'Estrange v Graucob [1934] Facts: L'Estrange signed a printed contract of sale for an automatic vending machine without reading it. The machine proved unsatisfactory and she claimed damages for breach of the implied condition as to fitness for purpose under the Sale of Goods Act 1893 s14(1). She was met with the defence that one of the printed terms of the sales agreement excluded the implied condition. Held: the printed term excluded the implied condition under the Act. Since E had signed the contract, it was irrelevant that she had not read it, even though the sales agreement was in ‘regrettably small print’. |
| INCORPORATION - The defence of non est factum - 'not my deed'. Explain what it is and give case authority. | What they signed is fundamentally different from what they intended to sign. Saunders v Anglia Building Society [1971] Facts: Elderly widow gifted the title deeds of her house to her nephew so he could borrow money, using the property as security. She was then asked to sign a document by a friend, who told her it was to do with the gift she had made. The document actually conveyed the property to the friend. The friend then mortgaged the property with Anglia Building Society. Widow pleaded 'non est factum' (not my deed). Held: the courts actually rejected the claim of non est factum. She knew the friend was helping her nephew obtain a loan - it was a similar document to the one she intended to sign. Note: this is a very rare plea. |
| INCORPORATION - SIGNATURE -Exceptions to the rule - Give an example of when a term contained in a signed contractual document will not be binding due to an overriding oral assurance. |
Curtis v Chemical Cleaning and Dyeing Co [1951]
Facts: Mrs Curtis took a white satin wedding dress to the defendant dry cleaners, and, on handing it over, an assistant asked Mrs Curtis to sign a receipt. When Mrs Curtis asked why she had to sign, the assistant replied that the defendants would not accept liability for damage to the beads and sequins on the trimming of the dress. She signed the receipt without reading it but the receipt did in fact contain a term excluding the defendants’ liability for any damage howsoever arising. When the dress was returned to Mrs Curtis it was stained. The defendants tried to rely on their exclusion clause.
Held: the oral assurance narrowed the scope of liability, as it was understood by the claimant, therefore the claim was allowed.
Imagine Curtis - DJ C - going in to get his wedding dress cleaned. The assistant started pouring chemicals on the dress while saying - the signature is only for the beads and sequins. The whole dress was ruined.
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| INCORPORATION - SIGNATURE - What happens if the courts don't believe the document has the 'nature' of a contract? | A signature will not incorporate an exemption clause if the document signed does not have contractual effect Grogan v Robin Meredith Plant Hire [1996] Facts: Grogan hired a machine and driver for a daily rate, each day a timesheet was signed. This timesheet said that all standard industry conditions applied. On standard condition was indemnity in the case of damage. Held: the court found that these were administrative documents, not a document a reasonable person would consider a contractual document. Contract already signed previously. Timing an issue. Exclusion clause has no effect. |
| INCORPORATION - SIGNATURE - will incorporate onerous clause except in extreme circumstances. | Chemical Transport v Exnor Craggs [2000] Held: If the clause was particularly onerous and obtained under pressure of time, then it will not be incorporated by signature. |
| INCORPORATION - REASONABLE NOTICE - What are the guiding principles for providing 'reasonable notice' for an exclusion clause. Give case law. | "Relevant factors include: 1. Whether the writing containing terms is obviously visible. 2. What is normal practice." Parker v South Eastern Railway Co. (1876-77) Facts: the plaintiff deposited a bag in the defendant’s cloakroom. He paid two pence and was given a ticket, on the face of which was printed: ‘See Back’. On the back of the ticket was a printed notice saying that the company would not be responsible for loss of any item whose value was more than £10. The plaintiff's bag, which was worth more than £10, was lost and he brought an action for damages against the company. The plaintiff had not read the notice on the back of the ticket. The company pleaded the exemption clause. Held: court of first instance were asked to assess if the customer had read and understood the ticket. They said no. Claim allowed. Appeal by defendant stated that jury was misdirected. Relevant question was whether the defendant had taken reasonable steps. They had. Appeal allowed. |
| INCORPORATION - REASONABLE NOTICE - What if the plaintiff can't read? What if the relevant terms are on a different document and merely referenced on the ticket in question? |
Thompson v London, Midland & Scottish Railway [1930]
Facts: Mother bought an excusion ticket for her daughter. The daughter could not read. The ticket had, on its face, the words ‘see back’ and on the reverse side stated that it was issued subject to the standard conditions set out in a railway timetable. Daughter stepped off the train while moving and was injured.
Held: daughter was bound by conditions. Seems like a harsh decision, but the idea that terms can be incorporated by reference to another document is sound. The fact the plaintiff could not read was irrelevant, as was the fact that considerable search was required to find the terms. The fact the excursion ticket was cheaper than the regular fare, also relevant, as the customer could not expect the same level of cover.
Dispute: it has been said that the outcome would have been different, had the defendant been aware that the claimant was blind. See Harvey v Ventilatorenfabrik Oelde GmbH (1988).
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| INCORPORATION - REASONABLE NOTICE - what if the terms of a newspaper competition are found in a different edition of a newspaper | O'Brien v Mirror News Group [2001] Facts: A scratchcard competition in the daily mirror. Paper said that the 'terms and conditions applied'. The T&C's weren't in every copy of the Mirror, and not in the copy in question. Where they incorporated? Held: the terms had been in other copies of the Mirror that month, so the court held it was reasonable to be bound by them. |
| INCORPORATION - REASONABLE NOTICE - What if the exclusion terms are in a language the claimant does not understand, and this is known to the defendant? |
Harvey v Ventilatorenfabrik Oelde GmbH (1988)
Facts: the contract was written in German, and an exclusion clause was inserted without the knowledge of the other party. The party relying on the clause knew that the other could not read the language in which the clause was expressed.
Held: The court held that exclusion clause was not properly incorporated.
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| INCORPORATION - REASONABLE NOTICE - What if there are no clear words on the front of the ticket, directing the customer to the terms on the back? | Henderson v Stevenson (1875) Held: the exclusion clause is unlikely to be upheld. |
| INCORPORATION - REASONABLE NOTICE -What if the terms are rendered illegible by a date stamp? |
Sugar v London, Midland & Scottish Railway [1941]
Held: the exclusion clause is unlikely to be upheld.
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| INCORPORATION - REASONABLE NOTICE - ONEROUS TERMS. What if a term is particularly onerous or unusual? | Interfoto v Stiletto [1989] Facts: Stiletto ordered photographic transparencies from Interfoto. A delivery note contain conditions, including one that stipulated that the transparencies had to be returned within 14 days of delivery or thereafter a holding fee of £5 per day would be charged. Stiletto did not read the conditions and returned the transparencies four weeks later. Interfoto invoiced Stiletto for £3,783.50. Stiletto refused to pay. |
| INCORPORATION - REASONABLE NOTICE - TIMING. What impact does 'timing' have on the enforceability of exclusion clauses? | Olley v Marlborough Court Limited [1949] Facts: Mr and Mrs Olley entered into a contract when they paid in advance at the reception desk for a week’s stay at a hotel. When they then went upstairs to their room, there was a notice which said: 'The Proprietors will not hold themselves responsible for articles lost or stolen, unless handed to the manageress for safe custody. Valuables should be deposited for safe custody in a sealed package and a receipt obtained'. On one occasion, Mrs Olley closed her self-locking bedroom door behind her and left the key behind the reception desk on the appropriate hook. While she was out, someone managed to get into their room and steal certain items. |
| INCORPORATION - REASONABLE NOTICE - TIMING. Give case authority that shows how timing has a different impact in cases involving automatic ticket machines, as opposed to face-to-face transactions. |
Thornton v Shoe Lane Parking Ltd [1971]
Facts: Mr Thornton entered a car park he had not used before. After putting money in a ticket machine, he was issued with a ticket and entered the carpark. On the ticket it read ‘[I]ssued subject to conditions ... displayed on the premises’. On a pillar opposite the ticket machine there was a display panel including a condition excluding liability for any injury. Later Mr Thornton was injured.
Held: automatic ticket machines were distinguished from face-to-fact ticket transations. In automatic trasactions, the offer was the 'readiness' of the machine, and the acceptance was depositing the money. In face to face transactions, the offer was made when the ticket was issued, and acceptence was made when it was retained without objection. In this case, the contract was already complete by the time the ticket was issued, and any terms alluded to on the ticket could not be binding. Denning pointed out that such serious conditions as excluding all liability for injury needs 'to be printed in red ink with a red hand pointing to it' Spurling v Bradshaw
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| INCORPORATION - A COURSE OF DEALING - An exclusion clause can be implied if, even though there is no written evidence, dealing between parties has been consistent. Give authority. | McCutcheon v David MacBrayne [1964] Facts: Mr McCutcheon wanted his car to be shipped to the mainland from the Hebrides. He asked Mr McSporran to organise it. Mr McSporran had employed the respondents to ship cars for him in the past so he delivered the car to them and paid them the money. The respondents gave him a receipt only. Normally, the respondents would provide a customer with a ‘risk note’ to sign. Mr McSporran had sometimes signed risk notes, but had never read the conditions. The risk note included a condition that the goods were shipped at the owner’s risk. The ship sank due to negligence and the car was lost. The respondents argued that the exclusion clause on the risk note was incorporated by previous course of dealing. Held: The previous course of dealing between Mr McSporran and the respondants had been inconsistent - sometimes there was a 'risk note' to sign, sometimes not, so the court held that the exclusion could not be implied by a consistent course of dealing. |
| INCORPORATION - COURSE OF DEALING - Lord Devlin claimed in McCutcheon that the test for knowledge of an exclusion clause in past contracts, to be sufficient grounds for finding an implied exclusion clause, was a subjective one. The plaintiff must know. However this was subsequently rejected by the HoL. Give authority. |
Harry Kendall & Sons v William Lillico & Sons Ltd [1969]
Facts: the parties entered into 3 to 4 oral contracts per month over a period of three years for the sale of poultry feeding mixture. Each transaction was then evidenced by a ‘sold note’ which contained terms – the buyers had never read the term in question.
Held: 3 to 4 times a month was considered regular enough. The subjective knowledge of the plaintiffs was irrelevant. What is important is that they continued to trade with the defendants, thus leading the defendants to believe they were assenting to the terms.
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| INCORPORATION - COURSE OF DEALING - What impact does the fact it's a commercial contract have on courts willingness to find a course of dealing? |
Petrotrade v Texaco [2000]
Facts: contract was concluded over the phone, and terms sent afterwards. Petrotrade claimed that they were sent after the contract was formed, but 5 similar contracts had been formed over the course of 13 months.
Held: courts more likely to find a 'course of dealing' in commercial contracts. 5 over 13 months considered sufficient.
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| INCORPORATION - COURSE OF DEALING - For an implied exclusion clause to be found, dealings must not only have been CONSISTENT, but also REGULAR. Give case authority. | Hollier v Rambler Motors (AMC) Ltd [1972] Facts: Mr Hollier's car was damaged in a fire on the defendant's premises. The defendant's had repaired Mr Hollier's car on 4 occasions over the past 5 years, and on at least 2 occasions Mr Hollier had signed a disclaimer form excluding liability for fire damage. The defendants sought to rely on it. |
| Explain Contra Proferentem | Contra = against Proferens = the offeror Against the person trying to rely on the clause. If it's clear, it's clear. If there are any ambigities they are interpreted against the person trying to rely on the clause. The more onerous, the more notice you require. CP will be applied less rigorously with limitation rather than exemption clauses - if some claim is still possible, it will be a limitation clause. |
| Give an example of the courts using Contra Proferentem in a case involving a road accident. | Houghton v Trafalgar Insurance Co Ltd [1954] Facts: Car in accident was carrying 6 passengers, though it was built for 5. An exclusion clause in the defendant's insurance excluded liability for vehicles carrying a greater load than they were built for. Held: it was ambiguous whether the exclusion clause applied to just vans and lorry's with an explicit payload or also to passenger vehicles that were built in a certain way. The defendant had the opportunity to construct their exclusion clause clearly, but did not. The benefit of the doubt was given to the plaintiff. Contra Preforentem applied. |
| INCORPORATION - How do courts treat clauses limiting liability from those excluding liability? Case authority. | Ailsa Craig Fishing v Malvern Fishing [1983] Facts: Ailsa Craig, owned a fishing vessel which sank whilst berthed at Aberdeen Harbour. When it sank, it damaged the vessel next to it, causing it also to sink. The loss of both vessels was caused by breach of contract and negligence on the part of Securicor, who provided security at the harbour. A clause in the security contract purported to limit Securicor's liability to £1,000. The trial judge awarded damages of £55,000 but Securicor appealed to the First Division of the Court of Session against this seeking to rely on the limitation clause. Ailsa Craig appealed to the House of Lords. Held: The courts do not use the Contra Proferentum maxim as strictly with limiting liability cases. This is because it is reasonable for the defendants to limit their liability, taking into account the risks they face, how much they are charging for their services and the responsibility of the claimants to have other insurance. |
| CONSTRUCTION - Give the case from where we derive our understanding of whether a clause has the proper construction to cover a breach? | George Mitchell v Finney Lock Seeds [1983] held: Lord Bridge: 'On its natural and ordinary meaning does the clause cover the breach, whether fundamental or otherwise?' |
| CONSTRUCTION - CONTRACTUAL LIABILITY - Give a case that shows the impact of construction on whether courts will find a clause to exlude liability. In this case, the courts used the Contra Proferentem rule to find that the clause excluded implied, but not express terms. |
Andrews Brothers v Singer [1934]
Facts: The plaintiffs entered into an agreement with the defendants to be the sole dealer of ‘new Singer cars’. The plaintiffs contracted to purchase a certain number of cars. The written agreement contained a clause stipulating that: ‘all conditions, warranties and liabilities, implied by statute, common law or otherwise are excluded.’ Singer supplied Andrew Bros with a car than had done 500 miles. They argues this was not new.
Held: the courts interpreted this clause strictly as applying only to implied terms.
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| CONSTRUCTION - NEGLIGENCE - How do the courts approach cases involving a clause excludiing liability for negligence on the part of the proferens? What is the 3 stage test, and what is the case? | Canada Steamship Lines v The King [1952] Facts: The Crown leased a freight shed to Canada Steamship Lines. Clause 7 of the lease purported to exclude liability for any damage to the contents of the shed and clause 8 stated that the Crown would keep the shed in repair. A fire broke out, due to the negligence of the Crown's employees, which destroyed the shed and all of its contents. The Crown sought to rely on their exclusion clause. "Held: Lord Morton Negligence clauses will be upheld if: 1. The word 'negligence' or a close synonym is used (Monarch Airlines v London Luton Airport [1997]), or, if this fails, 2. The wording is wide enough to include negligence, and furthermore, 3. The wording is not so wide, that It could refer to another source of liability. If it does, negligence will be excluded. See White v John Warwick, and Alderslade v Hendon Laundry." Dispute. This approach has been widely criticised, and courts tend to take a more natural approach these days, especially concerning commerical contracts where both parties are using professional lawyers. |
| CONSTRUCTION - NEGLIGENCE - APPLYING CSS - Give case authority that shows more than one possible interpretation of an exemption clause for liability arising through negligence led the courts to find against the proferens. | White v John Warwick & Co Ltd [1953] Facts: Mr White hired a tradesman's bike from the defendants. He was thrown off the bike and injured when the saddle tipped up. Clause 11 of the agreement provided 'Nothing in this agreement shall render the owners liable for any personal injuries to the riders of the machines hired...' Mr White brought an action claiming damages for personal injuries. His claim relied on two arguments: that the dendant was bound by an implied term to provide goods reasonably fit for purpose under s14 of the Sale of Goods Act, and that the defendant's were negligent for not providing a bike in good working order. Held: Denning found that Clause 11 could apply to the statutory implied term to provide a bike reasonably fit for purpose, so did not also exclude liability for common law negligence. Essentially, he found the exemption clause TOO WIDE under Canada Steamship to explicitly exclude negligence. |
| CONSTRUCTION - NEGLIGENCE - APPLYING CSS - Give case authority that shows where only one possible interpretation of an exemption clause for liability arising through negligence was found, leading the courts to find against the claimant. | Alderslade v Hendon Laundry [1945] Facts: Mr Alderslade left handkerchiefs with the defendant laundry to be washed. They were never returned so Mr Alderslade bought some new ones and tried to claim back the expense. The defendants relied on Condition 3 of the terms on which the handkerchiefs had been accepted: 'The maximum amount allowed for lost or damaged articles is twenty times the charge made for laundering'. The defendants offered this amount to Mr Alderslade but he refused and brought an action against them as it was not nearly as much as he had spent replacing the lost handkerchiefs. Held: Counsel for the claimants suggested that there were two possible interpretations of condition 3 - and absolute breach of strict terms (so loss or damage without negligence), and also loss or damage through negligence. The court rejected this idea, as they could not be liable for loss or damage without negligence in any case (they were not insurers afterall). Only one interpretation was possible - negligence. Claim rejected. |
| Give a case that shows, in commercial contracts where the parties are of equal bargaining power, contra proferuntum has a very limited role. | Victoria Street v House of Fraser [2011] Held: Lord Neuberger: ‘the words used, commercial sense, and the documentary and factual context are, and should be, normally enough to determine the meaning of a contractual provision.’ |
| CONSTRUCTION - NEGLIGENCE - APPLYING CSS - What is the relevance of Canada Steamship rule for to modern commercial negligence exemption clauses? Discuss authority. | "Exemption clauses are just part of the contractual apparatus for distributing risk. There is no need to approach such clauses with horror, or with a mindset detirmined to cut them down…." "In recent years, and especially since the enactment of UCTA, the courts have softened their approach to both indemnity clauses and exemption clauses... my impression is that, at any rate in commercial contracts, the Canada Steamship guidelines (in so far as they still survive) are now more relevant to indemnity clauses than to exemption clauses." Jackson LJ Persimmon Homes Ltd v Ove Arup & Partners Ltd [2017] Facts: Persimmon Homes claimed that Ove Arup & Partners, had negligently failed to identify and report on the presence of asbestos on a site the claimant was developing. The defendant relied on exclusion clauses in the contract, which were repeated using the same wording in associated warranties. The exemption clauses and warranties were found in a section of the relevant contract headed "Professional indemnity insurance"; these provided that the defendant would maintain professional |
| Persimmon cont. | indemnity insurance of not less than £5 million per event. The relevant clauses stated that the defendant'sliability for pollution and contamination would be limited to £5 million in the aggregate. The exclusion stated that: "Liability for any claim in relation to asbestos is excluded." Held: The exclusion clause was allowed to stand. The claimants appealled citing The Canada Steamship Company, but the Supreme Court suggested that the rule in Canada Steamship might not be relevant to commercial parties with professional legal representation and comparible bargaining power. Appeal dismissed, clause upheld. |
| EXEMPTION CLAUSES AND THIRD PARTIES - give case law that shows how third parties can take advantage of exemption clauses. Failed. | Scruttons v Midland Silicone [1962] Facts: A contract existed between Midland Silicones and a carrier to transport barrels of chemicals from the US to the UK. The contract stipulated that the liability of the carriers would be limited to $500 per barrel (despite the fact the contents were worth considerably more approx $2000). The stevedores (Scruttons) in the UK damaged the barrels and Midland sought to sue in tort (reasonably forseeable duty of care). Scruttons appealed, stating that the carrier was acting as an agent for them, and they should also be allowed to enjoy the benefits of the $500 per barrel max liability. Held: Appeal failed. Priniciples: An agreement argument could succeed if: (1) the contract of carriage makes it clear that the stevedore is intended to be protected; (2) the contract of carriage makes it clear that the carrier is contracting not only on his own behalf but also as agent for the stevedore; (3) the carrier has authority from the stevedore so to contract; and (4) consideration moves from the stevedore. (known as a himilaya clause) |
| EXEMPTION CLAUSES AND THIRD PARTIES - give case law that shows how third parties can take advantage of exemption clauses. Succeeded. | The Eurymedon [1975] As long as you meet Lord Reed's criteria, you can take advantage of an exemption clause. See Privity. |
| STATUTE - 3RD PARTIES AND EXEMPTION CLAUSES. Give statute for exempting 3rd parties. | "Contracts (Rights of Third Parties) Act 1999 s1(6) - 3rd Parties can be exempeted s6(5) - can exempt 3rd parties in contracts for carriage by sea." |
| STATUTE - what's the case that allows us to apply schedule 2 sections 3 and 2 in UCTA? |
Stuart Gill v Horatio Meyer [1992]
Facts: concerned the installation of overhead conveyer belts. Payment was to be made in stages, the final 10% on completion. The buyer, Meyer alleged there were defects and withheld the final payment - claiming that it had a common law right of 'set off'. Stuart Gill sued becauses they had a term in the contract excluding 'set off'. Very common term. Meyer claimed that his amounted to a breach of s13(1)(b) - excluding or restricting any right or remedy.
Held: the court agreed that the exclusion term constituted a breach of s13(1)(b).
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| STATUTE - NEGLIGENCE - How does the Unfair Contract Terms Act (1977) define negligence? There are three categories. | a) any obligation, arising from the expressor implied termsof a contract, to take reasonable care or exercise reasonable skill in the performance of the contract; b) any common law dutyto take reasonable care or exercise reasonable skill; and c) the common duty of care imposed by the Occupiers’ Liability Act 1957. |
| What does section 6(1) of UCTA provide? | Sellers impled obligations to title, under section 12 of the sale of goods act, cannot be excluded. |
| What does section 2(1) of UCTA provide? | You cannot exclude liability for personal injury or death resulting from negligence. It also applies to NOTICES, and not just contracts. UCTA will still bite on non contractual notices. |
| What does section2(2) of UCTA provide? | Clauses excluding liability for damage to property or goods is subject to a test of reasonableness |
| What does section 6(1A) of UCTA provide? | Breach of sections 13 (sale by description), 14 (fitness for purpose) and 15 (sale by sample) cannot be exlcuded or restricted, except subject to a test of reasonableness. Section 6(1A) applies whether the contract is individually negotiated or on another party’s standard terms. |
| How do courts treat s11 and sch 2 of the UCTA 1977? | George Mitchell (Chesterhall) Ltd v Finney Lock Seeds Ltd [1983] Facts: The respondents bought some Finney's Late Dutch Special cabbage seeds from the appellant seed merchants. The respondents had purchased seeds from the appellants for many years and were aware of the relevant conditions of sale. The conditions of sale were on the back of the invoice and limited liability to replacement of the goods or a refund of the purchase price. The respondents planted the seeds in 63 acres, but rather than being Finney's Late Dutch Special cabbage, they were autumn cabbage; the crop was commercially useless and had to be ploughed in. The seeds had cost £201.60 but the loss to the respondents was over £61,000. The appellants tried to rely on their limitation clause. Held: Lord Bridge clarified that the test of reasonableness, in s11, subject to the guidance in schedule 2, was opertated in a manner analogous to judicial discretion, and therefore did not provide precedent guidence. |
| UCTA - defining 'written standard terms'. What if exclusion clauses on a standard document even if other negotiated documents are included in the total contract, when much of the rest of the contract is individually negotiated? | St Albans City Council v International Computers [1995] Facts: the 'contract' comprised of a number of documents. Some of these were individually negotiated, however the document containing the exclusion clauses was International Computers' standard terms. Held: Even though much of the contract had been negotiated, because THAT BIT of it hadn't been, it did amount to 'standard terms'. |
| UCTA - defining 'written standard terms'. What if standard exclusion clauses are used, when much of the rest of the contract is individually negotiated? |
Commercial Management v Mitchell Design [2016]
Held: Obiter...Parties could be dealing on 'standard terms' even if those terms hadn't been incorporated in their entirety. If the exemption and limitation clauses remained untouched, they were held to fall under UCTA.
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| What is the significance of timing in s11(1)? "the term shall have been a fair and reasonable one to be included having regard to the circumstances which were, or ought reasonably to have been, known to or in the contemplation of the parties when the contract was made." | What is important is not the specific breach that occurred, and whether the exclusion or liability seems reasonable in retrospect, but what the parties anticipated and intended at the time of contracting. What breaches were foreseeable? What were they intending? |
| Which case can you use to explain the impact of bargaining power in sch2(a) of UCTA? | Watford Electronics v Sanderson [2001] Held: the bigger the difference in bargaining power, the less reasonable it is to rely on an exclusion clause. Aide: The Staves have an electronic project and David Sanders son comes to watch them. The Staves have a clause limiting liability for hating the gig. There's a big difference in bargaining power between them. |
| Persimmon sentence | Following Persimmon it is unclear how contra proferentem and CS will be applied to commercial dealings in the future, so here I apply both as a possible line of argument. |
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