Exclusion of Liability Summarised Notes for the Contract Law module, LLB, at City, University of London (achieved a 1st class using these) - can of course be used for other universities as well!
Would really recommend the full bundle of notes
EXCLUSION CLAUSES
Ways in which exclusion clauses may be incorporated into a contract
Common law rules relating to validity of exclusion clauses
Unfair Contract Terms Act 1977 and Unfair Terms in Consumer Contract Regulations 1999
Contract terms may attempt to exclude or limit one party’s liability for breach, misrepresentation
or negligence
Validity of exclusion clauses
Exclusion clauses were controlled by common law, but recent statutes by Unfair Contract Terms Act
1977 and Consumer Rights Act 2015 need to fist consider common law position before statutory
controls
Exam tip: UCTA 1977 and CRA saves time than in full but refer to full name and year once
3 tests for exclusion clauses to be valid at common law
It must be a term of the contract (must be incorporated in contract);
It must cover the damage that was caused;
It must be reasonable
Incorporation of exclusion clauses – same as incorporation of normal terms
Incorporation by signature: document with contractual terms + signed, terms must be
incorporated into contract even if party did not read/ understand it can be unaware of
exclusion clause will be part of contract
o Signed contract can be invalidated in whole or part if there is misrepresentation as to effect of
exclusion clause
L’Estrange v Graucob (1934): Mrs L’Estrange owned café and ordered cigarette machine from
manufacturers which was faulty, she claimed Graucob was in breach plied by Sale of Goods Act
1893 that the goods were reasonably fit for their purpose Graucob claimed L’Estrange signed
contract with a clause stating ‘any express or implied condition, statement or warranty,
statutory not stated is excluded’ which was in small print and L’Estrange did not see held
signature made lack of awareness of exemption clause irrelevant
Curtis v Chemical Cleaning Ltd (1951): claimant took a wedding dress to be cleaned, signed a
document contained a clause to exempt dry cleaners from liability for any damage ‘howsoever
caused’ whilst shopkeeper said exclusion for liability only for damage to beads on dress dress
suffered from bad staining- dry cleaners tried to rely on exclusion clause claim successful, D
could not rely on it due to statement made by assistant
Incorporation by notice: exclusion clause must be introduced before or at time of contract
oOlley v Marlborough Court Hotel (1949): Mr and Mrs Olley booked into Marlborough Hotel,
contract for their stay formed at point of check-in, goods were stolen from their hotel room,
hotel tried to disclaim liability based on notice on wall which stated ‘the proprietors will not
hold themselves liable for articles lost or stolen unless handed to the managers for safe
custody’ held hotel could not rely on exclusion clause, as contract formed at reception desk
which could not see notice as it was in the room not incorporated into contract
oNotice given must be reasonable, must be made sufficiently aware of its existence before or at
time of contract
Parker v South Eastern Railway (1877): Mr Parker left luggage in cloakroom at railway station
and was given ticket in return for payment of fee, ticket had clause at back which provided
railway company not liable for luggage exceeding £10 value Mr Parker’s claim successful as
railway company could not prove made aware of existence of existence of clause
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, Incorporation on a ticket: Parker v South Eastern Railway is good example, must be on a
document that will reasonably be considered to contain contractual terms
oChapelton v Barry Urban District Council (1940): claimant hired deckchairs, received two
tickets from council’s beech in return for payment on back of tickets it stated Council not be
liable for any accident or damage from claimant believed ticket was merely a receipt for
payment and did not read it chair collapsed and claimant injured claim successful as court
did not accept exclusion clause had been incorporated into contract since it had not been
brought to claimant’s attention and that it was unreasonable that ticket contained contractual
terms
oSometimes need to go to great lengths to ensure exclusion clause has been brought to attention
Thornton v Shoe Lane Parking (1971): sign at entrance of car park which stated parking fees
and a notice that parking was ‘at owners risk’, drivers were required to stop at barrier on entry
to car park and take ticket, each ticket contained statement saying ‘ticket issued subject to
conditions of issue as displayed on premises’, conditions of contract displayed on notice inside
car park claimant injured in car park and sued for property and personal injury D argued
they were covered by exclusion clause claim successful, operators of car park did not take
sufficient steps to draw exclusion clause to claimants attention before contract made Lord
Denning said customer had no chance of negotiating, cannot protest with machine, contract
concluded then
Incorporation by reference to another document: where reference made to an exclusion clause
is in a document, claimant must be drawn to clause itself
oDillon v Baltic Shipping Ltd (The Mikhail Lermontov) [1991]:booking form of a cruise contained
contract of carriage was ‘subject to conditions and regulations printed on the tickets; contract
of carriage was issued after booking at the same time as tickets ship sank and claimant was
injured shipping company tried to rely on exclusion clause claim successful, held booking
did not do enough to draw claimants attention to exclusion clause not incorporated into
contract
oInterfoto Picture Library v Stilletto (1989)
Claimants ran a photo library, the defendant was in advertising. The claimants advanced some
transparencies to the defendant for his use. The package of the photos contained a document
stating that if any transparencies were kept longer than 14 days a £5 +VAT holding fee would be
charged per photo per day; defendant had not read document and then forgot about the
transparencies and failed to return them for 6 weeks claimants brought an action claiming a
holding fee of £23,783 as specified in the contract held term not incorporated, where a term
is particularly onerous the person seeking to rely on the term must take greater measures to
bring it to the attention
Incorporation by previous course of dealings: exception to rule that must have sufficient notice
for exclusion clause when previous course of dealing between parties
oJ Spurling Ltd v Bradshaw (1956): parties contracted between each other for many years for
storage of goods in warehouse, on one occasion D delivered eight barrels of orange juice, few
days later D received acknowledge receipt, which contained clause exempting from liability of
loss or damage ‘caused by negligence’; when D collected barrels, some were empty and some
contained dirty water refused to pay storage held despite document with exclusion clause
was received until after contract, it IS incorporated due to regular course of dealing between
parties over the years
Construction of exclusion clauses – needs to cover breach that has occurred EC can still fail even if
implemented
Contra proferentem rule: states that any ambiguity in wording of clause will be construed against
the party attempting to rely on it benefit will then be given to claimant
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