Exclusion/exemption and limitation clauses

Flashcards by alan.10a, updated more than 1 year ago
Created by alan.10a almost 8 years ago


Exemption and limitation clauses.

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Question Answer
What are exemption/exclusion and limitation clauses and what are they used for? They are subject to common law and statutory control and are used to limit or exclude the amount of liability there is in a breach. however, they need to be incorporated appropriately before or at the time of the contract being made otherwise they will not be considered as terms of the contract as seen in Olley v Marlborough Court
What Act has been regulating these clauses since 1977? Unfair contract terms Act 1977
How can exemption clauses and other terms in general be incorporated? 1. Through Signature (even if you haven't read it as seen in L’Estrange v Graucob) 2. Through notice 3. Through course of dealing
In what circumstance will a signed document not be binding? - If the scope or meaning of the clause has been misrepresented, or if there is an element of fraud: Curtis and Chemical Cleaning - Where the signature has been obtained by fraud or misrepresentation or fraud
When incorporating through notice what are the three requirements which must be met? Timing : notice of the terms must be given at or before the time when the contract is concluded: Olley v Marlborough  Contractual document: the document containing or referring to the terms in question must have been intended to have contractual effect: Chapleton v Barry  Notice must be reasonable - Reasonable steps must have been taken to bring the terms to the attention of the other party as seen in Parker v South Eastern Railway
The more unusual a clause is, the... Higher the degree of notice is required as seen in Thornton v Shoe Lane Parking
How can incorporation be made by a course of dealing or business practice? If the parties have had a course of dealing which is both regular and consistent then a term which has been used throughout that dealing may be taken to be incorporated into subsequent transactions between the parties: Spurling v Bradshaw
What is the contra proferentem rule? As seen in Houghton v Trafalgar Insurance it is a rule which allows courts to interpret an exemption clause narrowly, contra proferentem, against the party which seeks to rely on it. therefore it is important to be precise with the wording of a clause when trying to limit liability for a breach.
In what circumstances, will an exemption clause, be unenforceable? - If the effect of the clause has been MISREPRESENTED: Curtis v Chemical cleaning - If an exclusion/limitation clause is inconsistent with an undertaking made at the time of the contract: Couchman v Hill - UCTA has restricted the extent to which a party can exclude liability for negligence, but some types of negligence can still be excluded. Parties seeking to exclude their liability for negligence must use clear words identifying negligence. Hollier v Rambler Motors - Liability for certain types of conduct can never be excluded. Parties can never exclude liability for their own fraud in their performance of a contract.
What is UCTA and UTCCR? UCTA=Unfair contract terms act 1977 UTCCR=Unfair terms in consumer contracts 1999
Even if an exemption clause meets the requirements of the common law, what else must it comply with? With legislation such as UCTA and UTCCRs
What is the purpose of UCTA? To protect consumers against exploitation by commercial parties. It also severely limits the operation of exemption clauses, either rendering them void or subjecting them to a test of reasonableness. UCTA applies to b2b and b2c contracts, but only to exclusion and limitation clauses.
What does S.2(1) of UCTA state? It provides that any contractual term, or notice excluding or restricting liability for death or personal injury caused by 'negligence' - is VOID.
How is negligence defined in s.1 of UCTA (a) breach of implied term to take "reasonable care or skill" in performance of a contract, or (b) breach of common law duty of care (not to cause injury or damage),
In what section of UCTA is a consumer defined? s.12: where: one party “deals as a consumer” (i.e. not a business) whilst the other party deals “in the course of business”
Can you exclude liability for breach of implied terms? (1) Under s.6(2) any clause excluding or restricting the implied terms as to quality of goods is VOID - against a CONSUMER.
In which section of UCTA is the test of reasonableness existent? s.11(1): in relation to a contract term, the requirement of reasonableness ... is that 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 does the UTCCR apply to? - It only applies to “consumer contracts” but cover all clauses, not merely exemption clauses. - It applies to Consumer contracts for the supply of goods or services 2. The term must not have been individually negotiated i.e.: applies to standard form contracts
According to UTCCR, what makes a term, 'unfair'? A term is unfair if: it is “CONTRARY to the requirement of GOOD FAITH, it causes imbalance in the parties rights and obligations to the DETRIMENT TO THE CONSUMER”
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