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| Incorporation -
The exemption clause must be incorporated into the contract. There are three ways to incorporate the term: Reasonable notice Signature Course of dealing -
GR: in order for an exemption clause to be incorporated, it needs to be made at before or at the time the contract is formed. Olley v Marlborough: notice given after contract was made – no incorporation. Thornton v Shoe Lane Parking: contract made when he took the ticket and entered the car park – since the terms and conditions were written inside the car park, they had not been incorporated. -
Reasonable notice HELD: D had provided clear notice of the exclusion clause – the ticket was a common form of contractual document. HELD: the exclusion clause had been incorporated by reference. C was still bound by the terms. -
If the document does not contain clear words directing the party to an exemption clause which is on the back, the exemption clause is unlikely to be incorporated. -
If exemption clause is deemed illegible, it is unlikely to be incorporated. -
Onerous clauses: require a higher degree of notice -
Denning’s big red hand rule ‘I quite agree that the more unreasonable a clause is, the greater the notice which must be given of it. Some clauses which I have seen would need to be printed in red ink on the face of the document with a red hand pointing to it before the notice could be held to be sufficient. (Spurling v Bradshaw) ‘It is so wide and so destructive of rights that the court should not rule any man bound unless it is drawn to his attention in the most explicit way.’ (Parker v Shoe Lane Parking) Interfoto v Stilleto – D had not taken reasonable steps to bring an onerous term to the attention of C – printing the term on a standard contract was not enough. It had not been incorporated. |
| Signature HELD: C had signed the document so the exemption clause was binding – it did not matter that C had not read the document, or that the exemption clause was in ‘regrettably small print’. HELD: although C had signed the form, D had made a misrepresentation to C so the exemption clause could not be relied on. Exception 2: nature of document does not have contractual effect (Grogan v Robin Meredith Plant) Exception 3: non est factum – ‘this is not my deed’. Signature will not be binding where C was unaware of the nature of the document they were signing as he had been defrauded. C must be unable to see the document for himself because he is blind, illiterate or has another disability. (Saunders v Anglia Building Society) |
| Course of dealing |
| Nature of document |
| Construction How the exemption clause is interpreted. Lord Bridge in George Mitchell v Finney Lock Seeds: ‘on its natural and ordinary meaning, does the clause cover the breach, whether fundamental or otherwise? ‘ -
GR: exemption clause will be construed contra proferentum – any ambiguity will be decided against the proferens (the party seeking to rely on the clause). The clause must be clear and unambiguous. Andrews Brothers v Singer: sale of cars. Contract expressly stated that the cars were new. C later found out that one of the cars was used. D tried to rely on an exemption clause which excluded 'all conditions, warranties and liabilities implied by statute, common law or otherwise'. HELD: the term was express, not implied, so D could not rely on the exemption clause. HELD: the clause was ambiguous as ‘load’ could mean passengers or weight and the max. weight had not been exceeded. Contra proferentum rule applied – load taken to mean weight so the clause did not apply. Monarch Airlines v London Luton Airport: exemption clause containing the word ‘neglect’ was sufficient to cover negligence. Considering the facts of the case, can the clause be used to exclude liability on some other ground other than negligence? The other ground must not be so fanciful and so remote that the proferens could not have been supposed to have sought protection from it. White v Warwick: the clause could be construed to cover an alternative ground – breach of contractual duty – so that ground was excluded but negligence could not be excluded. Alderslade v Hendon Laundry: there was no alternative head of damages, so the only ground the words could have been used to protect against wa negligence – the court gave effect to the clause. |
| UCTA 1977 |
| Scope of UCTA | Only deals with exemption clauses (defined in s.13) s1(3): Only applies to business liability in contract and tort, i.e. breach of duties arising: (a): in the course of business and; (b): from the occupation of premises used for business purposes business-business contracts and business-consumer contracts |
| s. 2: excluding liability for negligence | s2(1): Cannot exclude/restrict liability for negligence if it has caused personal injury or death s2(2): Can exclude/restrict liability for negligence causing other loss or damage, providing it is reasonable
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