exclusion clauses

what will the courts always respect?
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Terms in this set (30)
what will the courts always respect?
freedom of contract
what do courts always take into account?
inequality of bargaining power
what are the areas of control that decide if such a clause is effective or not?
1) Is the term part of a contract under the common law rules on incorporation?

2) Is the term effective under common law rule of *contra proferendum?

3) Is the terms effective under the rules in the Consumer Rights Act 2015 or Unfair Contract Terms Act 1977
what does contra proferendum mean?
against the person putting it forward

aka if the exlusion clause is vague it will be interpreted against the person relying on it
Has the clause been incorporated:

who has to show the clause is part of the contract?
The party who wishes to rely on the exclusion
Has the clause been incorporated:

what did Lord Denning say about exclusion clauses in Thornton v Shoe Lane Parking?
' the more onerous the exclusion, the clearer it must be'
Has the clause been incorporated:

Why was the clause not incorporated in Thornton?
Exclusion was only seen AFTER the contract was finished

Therefore it was not clear enough to be incorporated into the contract
Has the clause been incorporated:

What does L'estrange v Graucob show is the general rule if a contract stating the exclusion is signed?
If something is written into the contract and the contract is signed, this is incorporated even if not read or understood
Has the clause been incorporated:

what is the exception to L'estrange according to Thornton and Interfoto v Stiletto?
unusual or onerous terms (ie ones exluding all liability for any damage) may not be incorporated without specific attention being drawn to them

Linked to idea in Thornton (the more unreasonable, the clearer they must be)
Has the clause been incorporated:

Curtis v Chemical Cleaning and Dyeing
Eventhough the exclusion had been signed (wedding dress cleaned-- signed document saying cleaners not liable for any damage-- but told her it was just for beading)
the exclusion could not be signed due to the oral statements made by the cleaners
Has the clause been incorporated: *Chappelton v BUDC*Exclusion clause not in the contract itself because there was nothing on the sign or ticket that made it clear there was an exclusion unlikely C knew of this exclusionHas the clause been incorporated: *Parker v SE Railway*Reasonable steps taken to bring attention to the clauses: There was a clear mention of the exclusion on the sign, and the ticket was clear that there was also the exclusion on the back of the ticket C should have known of the exclusionHas the clause been incorporated: *O'Brien v MGN*Reasonable steps taken to bring attention to the clauses: The paper told readers that there were rules that applied, and readers could have found these out D took reasonable steps to let C know of this exclusionReasonable steps taken to bring attention to the clauses: Hollier v Rambler Motors why was the term not incorporated?3 or 4 times over 5 years is not frequent enough to establish a course of dealings Therefore it was unlikely H knew of the exclusionReasonable steps taken to bring attention to the clauses: why was the term incorporated in *Spurling v Bradshaw*?They had frequent enough contracts to establish a 'regular course of dealings' and it was very likely B knew of the exclusionIs the term effective under contra proferentem? Inequality of bargaining power in *Hollier v Rambler*?H was a private induvidual and R was a Business, So R was in stronger position Court protected H by not letting the unclear exclusion clause to be forced on himIs the term effective under contra proferentem? Transocean Drilling UK v Provience RecourcesIf the term is clear and freely agreed the court will probably allow the clause The clause was very clear in how it should apply and was repeated numerous times Both parties agreed to the terms Both parties were businesses so had the power to negotiateIs the term effective under the CRA 2015? s62when the term puts the consumer at a disadvantage by limiting their rights, or increasing their obligations, compared to the trader. This is considered by taking into account the nature of the contract and the circumstances existing when the term was agreed to *if a term is unfair, it does not apply*Is the term effective under the CRA 2015? s62 what terms do the fairness test not apply to?- exclusion about death or personal injury caused by negligence (never be excluded *s65*) -exclusions about the implied rights to goods (*s31*) and services (*s57*) which can also *never be excluded* -Terms which specify the main subject matter of the contract or the pirve will automatically be fair, as long as they are: *Transparent* (understandable); *prominent* (average consumer is aware of the term) The average consumer is someone who is reasonably well informed, observant and circumspectUCTA 1977 s2(1)manufacturers, owners of premesis or suppliers of services *cannot* exclude liability for causing daeth or personal injury by negligenceUCTA 1977 s2(2)supplies of services, manufacturers, or owners of premesis *can* exclude liability for causing property damage by negligence in so far as such clauses are reasonableUCTA 1977 s3parties *can* exclude liability for breach of contract if the clause *is reasonable*UCTA 1977 s6(3)sellers *can* exclude the implied terms about goods but only insofar as such clause is *reasonable*UCTA 1977 s7(3)the sekker *can* exclude the implied terms about services but only insofar as such a clause is *reasonable*UCTA 1977 concept of reasonableness S11(1)applies to exclusion clauses in general based on what was known to the parties at the time of making the contract 'knowledge test'UCTA 1977 concept of reasonableness S11(2)applies specifcally to exclusions about the *implied terms of goods and services* Guidlines for reasonableness set out in *schedule 2*UCTA 1977 concept of reasonableness S11(2) *schedule 2*- the relative strength of bargaining power (imbalance = court more likely to say clause is unreasonable) -whether the customer recieved any *inducement* to agree to the term (if party recieved something court more likely to say clause is reasonable) -whether the buyer knew or should have reasonably known about the term (if term is unclear court is more likely to say its unreasonable) -whether the goods were made to the *special order* of the customer (courts more likely to hold the clause reasonable* -whether liability is accepted only if certain *conditions* are complied with (if party says they are only liable for 2 days after purchase, court will say this is unreasonable)UCTA 1977 concept of reasonableness S11(4)applies to *limitation clauses* these may be reasonable based on the recources of the seller and the availability of insurance for the sellerUCTA 1977 concept of reasonableness St Albans DC v International ComputersHeld the clause was unreasonable as: -there was an inequality of bargaining power -£100,000 was very small compared to company's potential liability -IC has over £50 million of insurance cover -IC in a better position to insure than local authoritiesUCTA 1977 concept of reasonableness Watford Electronics v SandersonCof A held clause reasonable because: - the contract had been freely negotiated between experienced businessmen with equal bargaining power -court should not interfer in such contracts, where parties agreed the risk should be shared