Exclusion Clause

Topics: Contract, Contractual term, Breach of contract Pages: 4 (1453 words) Published: October 6, 2012
Exclusion Clauses
Over the past few decades, with the development of contract law, more and more people has paid attention to the exclusion clauses contained in a document which is signed by the parties. Many contracting parties use this technique to avoid liability for breach of contract. In this essay, exclusion clauses can be defined as a clause included in a contract to either limit or exclude liability of a party in breach of the agreement. (also termed exemption clauses or exemption clauses.) Consequently, it is argued that whether the party will be bound by the exemption clause which is signed by the parties or not. Therefore, this essay will analyze the exemption clause with signature based on several court cases and illustrate the effect of an unsigned exemption clause by using a short hypothetical scenario and a court case. Signed Exclusion clauses

As a general rule, a person who signs a document which contains contractual terms is bound by the clause of the document. To be specific, if a party signs a contractual document incorporating an exemption clause, it will automatically form part of the contract. Therefore, Signature can ordinarily bind a person to the terms even if he has not read or understood the terms set out in the document. What has come to be known as the principle in L'Estrange v Graucob was expressed by Scrutton LJ as follows: ‘When a document containing contractual terms is signed, then, in the absence of fraud, or, I will add, misrepresentation, the party signing it is bound, and it is wholly immaterial whether he has read the document or not.' According to the case of L’Estrange v Graucob [1934] 2 KB 394, the plaintiff bought an automatic cigarette machine from the defendants. She signed a contract called sales agreement which include several clauses, but did not read. When she discovered the machine was defective, she tried to sue Graucob for breach of contract, but the defendant was able to rely on the exclusion...
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