There are two urgent issues for us to figure out when dealing with two questions: firstly, whether Ron’s exclusion clause on the receipt or the sign is effective based on the fact that Winston does not know that existence of exclusion clause. Secondly, whether Winston accepts Ron’s exclusion clause at the right time and whether it can exclude Ron for liability.
(a) Whether Winston is bound by the words on the receipt or the sign?
As we can see in the case introduction, Ron has manufactured poor quality paint due to its negligence. The poor quality paint has caused damage to the client’s building. It is the poor quality paint that makes losses to Winston. Later, the losses are caused by Winston’s employee, Jeff’s deliberate willingness. Ron is irresponsible to the losses.
The so called exclusion clauses are also known as exception or exemption clauses or ‘no liability’ clauses. It aims to exclude or limit the liability of the companies inserting them. It can be used to absolve companies of liability when they will otherwise be too risky to do business. Its effectiveness will depend on the construction of the contract as a whole, taking into account the bargaining position of the parties. On the one hand, according to Thompson v London, Midland & Scottish Railway Co, eBay International AG v Creative Festival Entertainment Pty Ltd, Olley v Marlborough Court Ltd and Balmain New Ferry Co Ltd v Robertson, the effectiveness of exclusion clause depends on the time of notice of it. The validity of exclusion clause of Ron depends on the time when Winston is aware of it. Notice of exclusion clause must be given before contract is made (not afterward). In the case, Winston has never read the notice on the receipt. therefore, the exclusion clause of Ron will not be effective. Namely, Ron should be responsible to the losses caused by its poor quality paint.
On the other hand, According to L’Estrange v Graucob Ltd, signing is the evidence you intend to be bound. Namely, you are bound by what you sign, even if you do not know what you have signed. Therefore，it is of great significance to carefully read what we sign before we sign it. We can know from the case introduction that Winston has never read the notice on the sign before he signs the receipt. But Winston is still bound by the exclusion clause based on the fact that Winston has signed the receipt. Namely, Ron should not be responsible to the losses caused by its poor quality paint.
Of course, whether Winston is bound by the words on the receipt or the sign also depends on the so-called statutory modifications, which may determine the effectiveness of exclusion clause. Common statutory modifications consist of Consumer Protection, Sale of Goods and Insurance, which may render an exclusion clause ineffective. According to Australian Consumer Law, as a business, its statutory rights will depend almost completely on what's in your contract. Namely, as a business buyer, the companies you buy from can take most of these statutory rights away, as long as they make this clear in your contract. They can do this by putting an exclusion clause in your contract. In this situation, there may be very little you can do if something goes wrong with your goods or services. What the business buyer can do if its contract has an exclusion clause is negotiating with the seller and challenging the exclusion clause. In the case, Ron’s exclusion clause statement is legal due to the regulations mentioned above, Winston, as a business buyer, should be responsible to its purchasing contract—receipt. Namely, Ron should not be responsible to the losses caused by its poor quality paint. What Winston can do in the case is just negotiating with Ron and challenging the exclusion clause with the help of court.
According to Australian Consumer Law, every business has a responsibility to respect its customer’s rights under the ACL, and to honor its legal obligations. All...
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