HMG3040 – Service Business & Hospitality Law
Semester A, 2012/2013
The legal issue of this case is to determine whether the exemption clause was incorporated into the contract between Alex and Cedar Motors and its legal effect. Furthermore, was Benny bounded by exemption clause then? Incorporation by Notice- reasonableness or sufficiency of notice Exemption clauses are terms in a contract by which a party inserting them seeks to exclude or limit all or some of his liability for the breach of the contract or for some tort. In the case, an exclusion clause attempting to render Cedar Motors and their employees immune to a claim in any damage, injury, or consequential loss was used. To be a term of contract, the existence of the exemption clause must be brought to the knowledge or notice of the party against who it is to be used. The burden is on the party seeking to rely on the exemption clause to establish that reasonable notice had been given. The notice of “All towing takes place at the customer’s risk. Cedar Motors and their employees accept no liability for any damage, injury, or consequential loss, however caused, while a car is being towed.” was displayed on the back of the towing vehicle where a reasonable person would not expect to find contractual terms. Therefore, unless Alex was given sufficient notice of the terms, the exemption clause was unenforceable. Apparently, neither Cedar Motors nor Benny had done that, so they were liable to the damage made to the car and the injury of Alex.
Time of Notice
An exemption clause will only be incorporated into a contract if notice of the exemption was given before or at the time of contracting. This was evidence proving that Cedar Motors was not protected by the notice. To exempt itself from liability, Cedar Motors should communicate the terms including the exemption clause to Alex before the conclusion of the contract. As in the case ‘Olley v Marlborough Court Ltd  1 KB 532’, the...
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