6. Exemption Clauses
provide that one party will not be liable in certain situations
defeat or limit liability
6.1 Control of exemption clauses
courts object to abuse of exemption clauses
freedom of contract based on assumption that parties have free choice
parties who use exemption clauses are often in strong bargaining positions
can use standard-form contracts to impose unreasonable exclusions of
liability
defence
declare unreasonable exemption clauses invalid
incorporation and interpretation
if a court can rule an exemption clause:
hasn't been incorporated into a contract
has been interpreted in such a way it doesn’t cover liability
in dispute
can be ruled as invalid
danger that courts will distort rules to indirectly control
unreasonable exemption clauses
Court of Appeal tried this by means of ‘fundamental breach’ doctrine
Photo Production v Securicor (1980)
https://www.lawteacher.net/cases/photo-production-v-
securicor.php
HoL confirmed courts had no common law power to strike down
unreasonable exemption clauses
6. Exemption Clauses 1
, EU introduced 1993 Directive on Unfair Terms in Consumer Contracts
requires all member states to legislate against such terms
6.2 Incorporation
signature
exemption clause will be incorporated into a contract if contained in a
signed contractual document
L’estrange v Graucob (1934)
https://www.lawteacher.net/cases/lestrange-v-graucob.php
purchaser of vending machine bound by wide exemption clause
‘when a document containing contractual terms is signed, then,
in the absence of fraud, or, misrepresentation, the party signing
it is bound, and it is wholly immaterial whether he has read the
document or not’
objective approach to intention
if C signs a document, it is reasonable to conclude C
agrees to all the terms
C may not have even read the terms but the signature
makes it appear as though C has
does not apple when one party negligently causes other
party to have a different subjective intention
this rule does not apply when signature is obtained by
misrepresentation
6. Exemption Clauses 2
provide that one party will not be liable in certain situations
defeat or limit liability
6.1 Control of exemption clauses
courts object to abuse of exemption clauses
freedom of contract based on assumption that parties have free choice
parties who use exemption clauses are often in strong bargaining positions
can use standard-form contracts to impose unreasonable exclusions of
liability
defence
declare unreasonable exemption clauses invalid
incorporation and interpretation
if a court can rule an exemption clause:
hasn't been incorporated into a contract
has been interpreted in such a way it doesn’t cover liability
in dispute
can be ruled as invalid
danger that courts will distort rules to indirectly control
unreasonable exemption clauses
Court of Appeal tried this by means of ‘fundamental breach’ doctrine
Photo Production v Securicor (1980)
https://www.lawteacher.net/cases/photo-production-v-
securicor.php
HoL confirmed courts had no common law power to strike down
unreasonable exemption clauses
6. Exemption Clauses 1
, EU introduced 1993 Directive on Unfair Terms in Consumer Contracts
requires all member states to legislate against such terms
6.2 Incorporation
signature
exemption clause will be incorporated into a contract if contained in a
signed contractual document
L’estrange v Graucob (1934)
https://www.lawteacher.net/cases/lestrange-v-graucob.php
purchaser of vending machine bound by wide exemption clause
‘when a document containing contractual terms is signed, then,
in the absence of fraud, or, misrepresentation, the party signing
it is bound, and it is wholly immaterial whether he has read the
document or not’
objective approach to intention
if C signs a document, it is reasonable to conclude C
agrees to all the terms
C may not have even read the terms but the signature
makes it appear as though C has
does not apple when one party negligently causes other
party to have a different subjective intention
this rule does not apply when signature is obtained by
misrepresentation
6. Exemption Clauses 2
