Exclusion Clauses

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  • Topic: Contract, Contractual term, Sale of Goods Act 1979
  • Pages : 7 (2247 words )
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  • Published : March 15, 2013
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ISSUE:

ADVISE ON WHETHER EXCLUSION CLAUSES FOUND IN STANDARD CONTRACTS AND NOTICES PLACED ON PLACARDS CONSTITUTE A CONDITION OF THE CONTRACT

AUTHOR: KATALILO JOY

INTRODUCTION

This is a paper advising a party that signed a standard contract with a telecommunications gaint without reading it. The paper will also consider whether the circumstance could have been different had the disputed clause been on a placard placed in a conspicuous place within the communications company premises where everyone collect the contracts for signing.

Facts

Mumbuna is a businessman who has decided to venture in the business of buying airtime and retailing it. He has decided to deal with one of the telecommunication gaints. In this regard, he was handed a standard contract for the buying and reselling of airtime to which he quickly appended his signature. Half a year later, he had sold all his stock and he presented his invoices to the telecommunication company for the payment that was overdue. He got no response. He decided to sue and was advised by the telecommunication that he had no legal right to enforce the contract as the contract had an arbitration clause.

The Issue(s)
- Can the company rely on the arbitration clause?
- Are terms in a standard contract legally binding?
- Can a term/condition on notice form part of the contract?

A standard contract is a contract where one party specify the terms of the contract and the other party has to deal with him/her on the set terms. There is no room for negotiation. This usually makes commercial sense in the case of big businesses like the telecommunication company in the case. It will be illogical both in cost and logistic for the company to be negotiating and drawing up contracts for each and every customer. This contract is thus offered to the other party on a “take it or leave it” basis.

The drawback to such contracts is that the other party usually has no time to scrutinize or read and understand the contract terms and the language maybe complex for better interpretation of the terms. The above being the case, the standard contract, like any other contract, is binding once both parties show intention to be legally bound by the terms of the contract. It is important, at this point, to note that terms are incorporated into a contract by signature, by notice or by a course of dealing.

In the case given above, Mumbuna decided to deal with a telecommunication gaint and it was in order that he was to enter into contractual agreement with it using a standard contract. Once he signed the standard contract, all the terms and conditions set in the said contract became binding on Mumbuna. The fact that he did not see the clause in dispute or even read the contract is immaterial in this case. He is bound.

The case of L’ Estrange v Graucob[1] refers. The plaintiff bought a cigarette machine for her cafe from the defendant and signed a sales agreement, in very small print, without reading it. The agreement provided that "any express or implied condition, statement or warranty... is hereby excluded". The machine failed to work properly. In an action for breach of warranty the defendants were held to be protected by the clause. It was held that when a document containing contractual terms is signed, then, in the absence of fraud or misrepresentation, the party signing it is bound, and it is wholly immaterial whether he has read the document or not. The facts show that Mumbuna signed the contract without even consulting from the company about the terms/conditions contained therein. This indicates that there was no chance of misrepresentation from the company. Misrepresentation occurs were, say in this case, the company or its representatives had given Mumbuna information that was partly misleading or incomplete. For example, the case of Cutis v Chemical Cleaning Co.[2] refers. In the case, the plaintiff took a wedding dress to the...
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