⇒ Exclusion clauses are terms that exclude or limit liability for a party when they breach the contract
⇒ Exclusion clauses are allowed due to freedom of contract
⇒ The courts do intervene occasionally e.g. to prevent a party in a stronger bargaining position from exploiting the other party
⇒ For an exclusion clause to have effect it must pass 3 stages:
⇒ There are 3 ways an exclusion clause can be incorporated in a contract:
⇒ Usually if a contract is signed the exclusion clause is binding
⇒ Sometimes a signed contract can be challenged, for example where the party only the signed the contract due to a misrepresentation e.g. Curtis v Chemical Cleaning and Dyeing [1951]
See, for example, Parker v South East Railway (1876-7) 2 CPD 416:
Facts: The claimant left luggage at the defendant's cloakroom. The defendant gave a ticket to the claimant which on the back said the defendant had no liability for lost/stolen goods over £10 (this was also said in the cloakroom). The claimant’s luggage was lost/stolen and the claimant tried to recover the loss.
Held: The Court of Appeal said the the defendant had to have made reasonable steps to ensure the other party knew the exclusion clause existed
⇒ So:
⇒ Unusual clauses and the ‘red hand rule’
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⇒ There are two requirements for an exclusion clause to be incorporated via a previous course of dealing:
⇒ i) There must be sufficient notice of the clause
⇒ ii) There must be consistency in the previous dealings
⇒ The UCTA makes some clauses void straight away. Other clauses must pass a test to determine how reasonable it is
⇒ S2 applies to negligence liability. Under S2(1), liability for death or personal injury as a result of negligence cannot be excluded and a clause purporting to exclude such liability will be automatically void. Under s2(2), a clause seeking to exclude liability for other loss or damage will be subjected to the test of reasonableness
⇒ S6 and S7 apply to strict liability. If ownership rights in property pass under the contract (such as a contract for the sale of goods) then s6 will apply. Both sections draw a distinction between business and consumer contracts. Liability for breach of a term implied under the Sale of Goods Act 1979, or the Supply of Goods Act 1982, cannot be excluded in a consumer contract. Such liability can be excluded in a business contract but only if the clause passes the test of reasonableness
⇒ This only applies to consumer contracts and the test of fairness is applied (if it does not pass this test it is said to be contrary to “good faith” requirements)
⇒ The main difference between this and the UCTA is that the UTCCR is about business to consumer contracts, but the UCTA is about business to business contracts
⇒ This also applies to ANY unfair term, whilst the UCTA only really applied to exclusion/limitation clauses
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