Exclusion Clauses Essays

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  • Topic: Contract, Contractual term, Standard form contract
  • Pages : 6 (1829 words )
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  • Published : December 26, 2011
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Exclusion Clauses Essays
Business Law

Word Count: 1950

Exclusion Clauses Essay

Exemption clauses are an agreement in a contract which helps the party to have limited or to exclude liability. It can be used unfairly which makes it a disadvantage to other partys which is why there are laws in place to limit the use of clauses and to make it fair. Mr. Torres has been using Greased Lightening for five years this time he placed a different order and at the same time the contract arrived late as well as that there were new terms stated in the contract now I will find out whether the clauses are valid explain them and any possible remedies.

According to Lord Fraser he said when exclusion clauses are made that exclude liability will be dealt with strictly as ‘these principles are not applicable in their full rigour when considering the effect of clauses merely limiting liability’ this was represented in (Ailsa Craig Fishing v Malvern (1983)) case. Therefore moving back to Mr. Torres case will be dealt with attention since it is excluding liability. If Greased Lightening exclusion clause was clear and unambiguous then it wouldn’t been an application of the contra proferentum rule. However, in my opinion it does seems ambiguous and unclear reason being notice arrived two days later than usual and the clause was written in small and pale gray text therefore it seems uncertain. All clauses need to satisfy the Unfair Contra Terms Act (1977) and pass the test of reasonableness

There are three types of incorporation of clauses one being by signature other being by notice and finally incorporation by a consistent and frequent course of dealings. In this case clause has been incorporated as a term in the contract using consistent and frequent course of dealings. For the term to be incorporated the party in this case, Greased Lightning need to give reasonable time to Mr. Torres. Incorporation by signature occur when a party signs a document then they are bound by the terms and clauses in that document. Incorporation by Notice is when a notice if given in reasonable notice only then the notice will be acceptable and there is no requirement for an actual notice of terms.

A clause doesn’t have any requirements to have it implemented it just needs to be made aware to the third party giving them reasonable notice. If the clause was incorporated into the contract it doesn’t mean it will be effective. The law is there to restrict parties that are vulnerable. Parties are protected through judicial control the common law. Contra proferentum rule is the judicial approach. Contra proferentum is where there is uncertainty in the wording of exclusion clauses and to back that up Mr. Torres was sent a letter saying new terms however the new terms were written very small and in faint gray writing which makes it ambiguous it appears to be. It seems like Mr. Torres goods had been damaged at the same time Green Lightening sent out the new documents reason to its late arrival and then informed Mr. Torres about the goods to help save guard them self’s of not paying for the damages which is a possible reason.

Unfair Contract Act deal with business to consumer contracts as well as business to business contracts. They are very similar. Under the unfair contract Act 1977(UCTA) transaction between firms are covered by UCTA, However UCTA have restrictions in place one being the test of reasonableness looking at Mr. Torres case it seems like Mr. Torres didn’t have and bargain power meaning had no chance to negotiate better terms and am sure he would therefore under this act Greased lightening will be liable. Most importantly it was negligence of the driver. In the case of (Phillips Products Ltd v Hyland (1987)) the court found that it was negligence of the driver therefore the clause wasn’t taken into account. Similar with Greased lightening it was negligence of the driver and the contract arrived late with no negotiation terms therefore it...
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