In the process of examining how exclusion clauses are incorporated into a contract for the sale of goods it is worth noting that exclusion clauses are subject to several common law rules which have evolved over the years by the judiciary as well as certain legislation implemented by parliament such as the Unfair Contract Terms Act 1977 and the Unfair Terms in Consumer Contracts Regulations 1999.
Exclusion clause may be inserted into a contract with the aim of excluding one party’s liability for breach of contract, misrepresentation or negligence. Exclusion clause have no effect unless they are incorporated as a term of the contract, moreover they must be incorporated when the contract is made and not afterwards as this would render the exclusion clause invalid a case in point being Olley v Marlborough Court.
As a means of control by the courts and in order to be considered as a defence exclusion clauses need to be incorporated in a contract and as a matter of construction and they also need to extend to the loss in question by the defendant.
Incorporation into a contract can take various forms the primary methods are usually by a signed contractual document between a buyer and seller. The buyer in this scenario will find it difficult to argue that the clause was not agreed upon as his signature is on the contractual document. If he did not read the document prior to signing it this would go against him as in L’Estrange v Graucob.
Another form of incorporation of exclusion clauses into a contract is by means of displayed notices. In must be pointed out that this method of incorporation will work only if at the time of making the contract the buyer new of the existence of the exclusion or else reasonable steps had been taken to bring them to his attention D & M Trailers v Stirling.
Incorporation in the course of previous...