Business Law

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  • Topic: Contract, Unfair Contract Terms Act 1977, Contractual term
  • Pages : 18 (7391 words )
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  • Published : March 7, 2013
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Question: Search and explain FIVE (5) reported Malaysian cases on the following topics: (i) Incorporation of exclusion or limitation clauses (ii) Construction of exclusion or limitation clausesThe explanation includes the issue and the decision made by the courts in these cases.Students are not allowed to rely on any cases which are found in the lecture materials.(10 marks)| Part A

Answer:
Exclusion clause is defined as provision in a contract under which one party is protected from being sued by other party for its liabilities are severely restricted. It is also known as limitation clause. Incorporation and construction of exclusion clauses are two types of the exclusion clause. Firstly, incorporation of exclusion clause cannot be effective to exclude liability if it is not part of the contract. The general principle is that a party must have had reasonable notice of the exclusion clause. The clause must be incorporated before or at the time the contract is concluded. Moreover, we can determine whether or not a term is incorporated into the contract depends upon whether the party has received reasonable notice. There are three ways to incorporate exclusion clauses as terms of the contract, such as incorporation by signature, incorporation by notice and incorporation by previous course of dealings. We found two cases on incorporation of exclusion or limitation clauses, which are Chin Hooi Nan v Comprehensive Auto Restoration Service Sdn Bhd & Anor [1995] 2 MLJ 100 and Sekawan Guards Sdn Bhd v Thong Guan Sdn Bhd [1995] 1 MLJ 811. In the case of Chin Hooi Nan v Comprehensive Auto Restoration Service Sdn Bhd & Anor [1995] 2 MLJ 100(Appendix: page 1), the appellant('Chin Hooi Nan') had, on payment of RM295 to the respondents, agreed to have his car waxed and polished by the respondent('Comprehensive Auto Restoration Service Sdn. Bhd & Anor'). He left his car at the respondents' premises in the basement of the Sungai Wang Plaza Complex and was given a receipt ('the receipt') with which to claim for the car later. When the appellant returned to collect his car from the respondents, he found that it had been damaged while being driven by an employee of the second respondent to a lower floor of the basement. The appellant sued the respondents for the costs of repairing the car, costs of hiring another car for one month, 25% depreciation in the value of the car at and costs of engaging an independent adjuster. The suit was dismissed with costs after a full trial in the magistrates' court on the ground that an exemption clause at the back of the receipt which stated that “The company is not liable for any loss or damage whatsoever of or to the vehicle, its accessories or contents. Vehicle and goods are at owner's risk” exonerated the respondents. The appellant appealed. At the appeal, the respondents raised the objection that relevant documents relating to the appellant's claims. For example, the receipt for the costs of repairs ('the repair receipt') and the appellant's credit card receipt were only marked for identification and not as exhibits. The makers were not called, thereby denying the respondents of the opportunity to cross-examine them. This case was based on incorporation of notice. It is settled law that an exemption clause however wide and general does not exonerate the respondents from the burden of proving that the damage caused to the car were not due to their negligence and misconduct. They must show that they had exercised due diligence and care in the handling of the car. For this instance, the respondents had not adduced any evidence to show that they had exercised due care and diligence when handling the appellant's car. On the contrary, there was ample evidence to show that the respondents had been negligent when their employee had involved the car in an accident while driving it to a different floor of the basement car park. In conclusion, the appeal must be allowed. Although the maker...
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