MN10442 – topic 5 exemption clauses and UCTA
Signed documents – unfair terms
- Signing a contract containing an exemption clause means it will form part of the
contract and thus you are bound by the terms – L’Estrange v Graucob (1934)
- Exclusion clauses – a clause which excludes a party of all liability for breach of
contract
- Limitation clauses – a clause which limits a party’s liability for a breach of contract
Common law regulation of exemption cluases
- Common law position
o Incorporation
Has the term been properly incorporated into the contract
How? And when?
o Construction and interpretation
Does the term civer the loss in question
Is it free from ambiguity
Incorporation
- By signature
o L’Estrange v Graucob – cigarette vending machine. She signed the documents
meaning she agreed to the terms
o Except where the effect of the term has been misrepresented
Curtis v chemical cleaning and dyeing co ltd – wedding dress to the
dry cleaners and there was an exemption cause that excluded the
entire liability and the women asked the dry cleaner and she said it
was against sequins and beads so the court held that as the worker
misrepresented it then they couldn’t rely on it
- Reasonable notice
o Must do what is reasonable to bring the term to the other party’s attention
o Interfoto picture library Ltd v Stiletto visual programmes Ltd (1988) – held the
more onerous the penalty cause, the greater the effort required to bring the
notice to the other parts attention. Photo library sent off slides to an
advertisement agency and said that the slides couldn’t be held for more than
14 days otherwise there would be a charge the advert co missed the deadline
and forgot about it and was then issued with a bill for £2000. Court held that
the clause was not allowed to be relied on as it was too onerous and the
company should have been more clear to the advert co and there wasn’t
enough clarity so they didn’t have to pay
When must it be incorporated?
- The timing of incorporation must be before or at the time of entering into the
contract
- Olley v Marlborough Court (1949) – couple that stayed in a hotel. They checked in
and paid in advance. They unpacked and went out for the evening and on coming
, back she found her coat and purse had been stolen. Tells reception and says they are
liable. They showed a sign on the door saying that the hotel wasn’t liable for items
left in the room and it should be left with reception instead, so they aren’t liable.
Court held they couldn’t rely on that clause as it was introduced to the contract too
late as the contact was made at the payment by reception and the exemption was
too late.
Contractual document
- The document signed is only binding if It can be established that it is a contractual
document
- Chapelton v Barry UDC (1940) – hiring a deck chair on a beach and as he put it up it
collapsed and injured him. When he paid it he got a receipt. On the back there was
an exemption cause saying they aren’t liable to any injuries. Court says they can’t
rely on it as it isn’t incorporated into the contract as it was only on a receipt, and it
was after the contract was made.
- Whether or not a document is a contractual one depends upon the facts of the case
Construction and interpretation
- Contra referendum rule
o Where the clause contains ambiguity, the court will interpret it against the
party seeking to rely on it.
o Clear words must be used, they must cover the liability in question
- Andrew bros (Bournemouth) Ltd v singer co Ltd (1934) – car dealership the Andrew
bros buy new cars from the singer dealership. In the agreement there was an express
clause excusing liability for all conditions, warranties and liabilities implied by
statute, common law or otherwise. Excluding all law pretty much. Batch of cars
received, and one wasn’t new. Sued singer and singer relied on this clause and the
court said that the express exclusion clause said they are excluding the implied terms
where the express term in the contract was for new cars so the express terms wasn’t
met and the exclusion cause didn’t cover the breach so they had to pay damages.
Unfair contract terms act 1977 (UCTA)
- ‘Legislation which imposes limits on the extent to which civil liability for breach of
contract, for negligence or other breach of duty, can be avoided by means of
contract terms and otherwise’
S.2 consumer rights act 2015 ‘dealing as a consumer’
- ‘trader’ a person acting for purposes relating to that person’s trade, business, craft or
profession
‘consumer’ – means an individual acting for purposes that are wholly or mainly outside that
individuals trade, business or craft or profession (does not apply if the goods are second
hand goods sold at public auction and individuals have the opportunity of attending the
auction in purpose)
S.31 liability cannot be excluded or restricted
- a term of a contract to supply goods is not binding on the consumer to the extent that it
would exclude or restrict the traders liability under any of these provisions:
Signed documents – unfair terms
- Signing a contract containing an exemption clause means it will form part of the
contract and thus you are bound by the terms – L’Estrange v Graucob (1934)
- Exclusion clauses – a clause which excludes a party of all liability for breach of
contract
- Limitation clauses – a clause which limits a party’s liability for a breach of contract
Common law regulation of exemption cluases
- Common law position
o Incorporation
Has the term been properly incorporated into the contract
How? And when?
o Construction and interpretation
Does the term civer the loss in question
Is it free from ambiguity
Incorporation
- By signature
o L’Estrange v Graucob – cigarette vending machine. She signed the documents
meaning she agreed to the terms
o Except where the effect of the term has been misrepresented
Curtis v chemical cleaning and dyeing co ltd – wedding dress to the
dry cleaners and there was an exemption cause that excluded the
entire liability and the women asked the dry cleaner and she said it
was against sequins and beads so the court held that as the worker
misrepresented it then they couldn’t rely on it
- Reasonable notice
o Must do what is reasonable to bring the term to the other party’s attention
o Interfoto picture library Ltd v Stiletto visual programmes Ltd (1988) – held the
more onerous the penalty cause, the greater the effort required to bring the
notice to the other parts attention. Photo library sent off slides to an
advertisement agency and said that the slides couldn’t be held for more than
14 days otherwise there would be a charge the advert co missed the deadline
and forgot about it and was then issued with a bill for £2000. Court held that
the clause was not allowed to be relied on as it was too onerous and the
company should have been more clear to the advert co and there wasn’t
enough clarity so they didn’t have to pay
When must it be incorporated?
- The timing of incorporation must be before or at the time of entering into the
contract
- Olley v Marlborough Court (1949) – couple that stayed in a hotel. They checked in
and paid in advance. They unpacked and went out for the evening and on coming
, back she found her coat and purse had been stolen. Tells reception and says they are
liable. They showed a sign on the door saying that the hotel wasn’t liable for items
left in the room and it should be left with reception instead, so they aren’t liable.
Court held they couldn’t rely on that clause as it was introduced to the contract too
late as the contact was made at the payment by reception and the exemption was
too late.
Contractual document
- The document signed is only binding if It can be established that it is a contractual
document
- Chapelton v Barry UDC (1940) – hiring a deck chair on a beach and as he put it up it
collapsed and injured him. When he paid it he got a receipt. On the back there was
an exemption cause saying they aren’t liable to any injuries. Court says they can’t
rely on it as it isn’t incorporated into the contract as it was only on a receipt, and it
was after the contract was made.
- Whether or not a document is a contractual one depends upon the facts of the case
Construction and interpretation
- Contra referendum rule
o Where the clause contains ambiguity, the court will interpret it against the
party seeking to rely on it.
o Clear words must be used, they must cover the liability in question
- Andrew bros (Bournemouth) Ltd v singer co Ltd (1934) – car dealership the Andrew
bros buy new cars from the singer dealership. In the agreement there was an express
clause excusing liability for all conditions, warranties and liabilities implied by
statute, common law or otherwise. Excluding all law pretty much. Batch of cars
received, and one wasn’t new. Sued singer and singer relied on this clause and the
court said that the express exclusion clause said they are excluding the implied terms
where the express term in the contract was for new cars so the express terms wasn’t
met and the exclusion cause didn’t cover the breach so they had to pay damages.
Unfair contract terms act 1977 (UCTA)
- ‘Legislation which imposes limits on the extent to which civil liability for breach of
contract, for negligence or other breach of duty, can be avoided by means of
contract terms and otherwise’
S.2 consumer rights act 2015 ‘dealing as a consumer’
- ‘trader’ a person acting for purposes relating to that person’s trade, business, craft or
profession
‘consumer’ – means an individual acting for purposes that are wholly or mainly outside that
individuals trade, business or craft or profession (does not apply if the goods are second
hand goods sold at public auction and individuals have the opportunity of attending the
auction in purpose)
S.31 liability cannot be excluded or restricted
- a term of a contract to supply goods is not binding on the consumer to the extent that it
would exclude or restrict the traders liability under any of these provisions:
