Exclusion Clause

Topics: Contract, Common law, Contractual term Pages: 12 (4427 words) Published: July 29, 2013
Introduction What is “Exclusion Clause”? There are various definitions of exclusion clause. Exclusion clause is a term or clause which can be incorporated into a contract. It is a term in a contract that seeks to restrict the rights of the parties to the contract. 1 The terms of the contract are important that they define both the content and scope of the parties’ mutual obligations.2 Classically, terms of the contract have been divided into either conditions or warranties. The development of the innominate term introduces more flexibility approach. Terms have also been classified as express and implied. Basically, exclusion clause is a clause that used to escape contractual liability by relying on a clause or term that excludes liability in certain cases, which is expressly written in a contract. In detail, the most important express term that often found in a contract is a term that exempted or limited the liability of one of the parties who incorporated into the contract is ‘exclusion clause’. 3 It simply means any clauses in a contract or in a notice that giving meaning to ‘exemption’, ‘exception’ or ‘disclaimers’ which have purpose to change any liability, responsibility or possible remedy, else occur from a contractual relationship between parties involved legal effects. These exceptions mainly found in a standardize form of contract especially in the printed conditions such as ticket, bill, receipts and etc. The party receiving it must either accept all printed conditions or refuse it. P.S Atiyah4 observed that an exemption clause may take many forms, but such clauses have one thing in common in that they exempt a party from liability which he would have borne had it not been for the clause. 5 It has been stated that it is common, particularly in standard form of contracts, for one or more parties to seek to exclude or limit liability for breach of contract or misrepresentation, which would otherwise imposed upon him.6

1 2

http://en.wikipedia.org/wiki/Exclusion_clause, retrieved March 19, 2010 Malaysian Journal of Law and Society 5(2001) 87 - 104 3 Malaysian Journal of Law and Society 6(2002) 85 - 102 4 Patrick S. Atiyah QC FBA (born March 5, 1931) is an English lawyer and academic. He is best known for his work as a common lawyer, particularly in the law of contract and for advocating reformation or abolition of the law of tort. He was made a Fellow of the British Academy in 1979. Retrieved March 24, 2010, from http://en.wikipedia.org/wiki/P._S._Atiyah 5 Current Law Journal liii Intellectual Property Malaysia [2002] 6 Halsbury’s Law of England

In business context definition, provision in a contract under which one party's liability that would arise by implication of law is excused in the listed conditions, circumstances, or situations is called as exclusions. 7 By nature, an exclusion clause with the purpose of excluding or limiting liability would only arise if the clause is valid. The court takes into account various factors in considering the validity of an exclusion clause. Also, applicable if the party intending to rely on the exclusion clause may also have to prove that the particular exclusion clause in question is applicable to the nature of liability the party relying on the clause may allege that the clause exempts the party from liability in breach of contract and negligence whereas the court may decide that the clause only affects one of those two liabilities. 8

7

http://www.businessdictionary.com/definition/exclusion-clause.html, retrieved March 19, 2010. It is further explained as a provision in a contract under which one party (usually the one which drafted the agreement) is protected from being sued by the other party for damages, loss, negligence, non-performance, etc., or its liabilities are severely restricted. Banks, for example, use exemption clause in documents for foreign trade where they accept no liability for any injury to the customer unless it can be proven to have been...
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