Advanced Contract Law Lecture 4 20/10/19
Terms and Exclusion
Exclusion Clause
• Objective view what the contract would look like
• Exclusion clause is used to limit liability of the contracting parties- for practical purposes
Advantage: Regulates and contains risk.
Disadvantage: Avoid consequence of failure to perform the contract. More acute when contracting
parties have unequal bargaining power. Courts try to mitigate this to an extent.
Validity of Exclusion Clause
Party seeking to rely on the exclusion clause has to prove:
• Is the exclusion clause incorporated into the contract?
• Does the clause cover the breach?
Party challenging the validity has to prove that it falls foul of the law:
• Does not fall foul of any statute.
The legal contortion by Judges to provide relief to injured party has subsided to a large extent after
introduction of UCTA 1977 and Consumer Rights Act 2015. However for negligence common law still
applies.
Contra proferentem
• If there is an ambiguity, the ambiguity is going to be resolved against the party relying on the
clause.
• Therefore, if there is an ambiguity in the exclusion clause it may become ineffective.
Excluding liability in negligence
Canada Steamship Lines Ltd. v The King [1952] AC 192
o Had entered into a Crown lease for 12 years, a number of clauses in the contract- especially
clause 7- and clause 8- any maintenance at Crown’s expense- and clause 17 protection to
lessor from who so ever may
“7. That the Lessee shall not have any claim or demand against the Lessor for detriment, damage or
injury of any nature to the said land, the said shed, the said platform and the said canopy, or to any
motor or other vehicles, materials, supplies, goods, articles, effects or things at any time brought,
placed, made or being upon the said land, the said platform or in the said shed.”
Does not state that it is excluding liability for negligence nor indicate that this was obvious, however,
shall we be able to exclude liability for negligence?
Terms and Exclusion
Exclusion Clause
• Objective view what the contract would look like
• Exclusion clause is used to limit liability of the contracting parties- for practical purposes
Advantage: Regulates and contains risk.
Disadvantage: Avoid consequence of failure to perform the contract. More acute when contracting
parties have unequal bargaining power. Courts try to mitigate this to an extent.
Validity of Exclusion Clause
Party seeking to rely on the exclusion clause has to prove:
• Is the exclusion clause incorporated into the contract?
• Does the clause cover the breach?
Party challenging the validity has to prove that it falls foul of the law:
• Does not fall foul of any statute.
The legal contortion by Judges to provide relief to injured party has subsided to a large extent after
introduction of UCTA 1977 and Consumer Rights Act 2015. However for negligence common law still
applies.
Contra proferentem
• If there is an ambiguity, the ambiguity is going to be resolved against the party relying on the
clause.
• Therefore, if there is an ambiguity in the exclusion clause it may become ineffective.
Excluding liability in negligence
Canada Steamship Lines Ltd. v The King [1952] AC 192
o Had entered into a Crown lease for 12 years, a number of clauses in the contract- especially
clause 7- and clause 8- any maintenance at Crown’s expense- and clause 17 protection to
lessor from who so ever may
“7. That the Lessee shall not have any claim or demand against the Lessor for detriment, damage or
injury of any nature to the said land, the said shed, the said platform and the said canopy, or to any
motor or other vehicles, materials, supplies, goods, articles, effects or things at any time brought,
placed, made or being upon the said land, the said platform or in the said shed.”
Does not state that it is excluding liability for negligence nor indicate that this was obvious, however,
shall we be able to exclude liability for negligence?
