TOPIC: Exclusion Clauses
Aim: to explore the legal effects of exclusion clause in contracts
I. Meaning of exclusion clause
II. Describe and apply the two main legal requirements governing the legality of exclusion clauses in contract
a) Common law rules/controls- judicial process
b) Statutory rules /controls
WHAT IS AN EXCLUSION CLAUSE?
An exclusion or exemption clause is a clause that seeks to exclude a party’s liability when there is a breach of the contract)
Example: Grace hires a powerful laptop together with suitable software for her job from Office Supplies Ltd. Grace signed a written hire contract with …show more content…
These conditions could be inspected at the station; one of them excluded liability for injury to passengers. T was unable to read, and so was unaware of the clause. She was injured and claimed damages.
Task: Analyse and assess whether the exclusion was incorporated and advise the parities
Held: The ticket was the document which should be expected to contain the terms, being more than a mere receipt of payment. The railway company had taken reasonable steps to bring the exclusion clause to the passengers’ attention, by incorporating into the contract document (ticket). T was bound by the clause (even though she could not read. 'Illiteracy is a misfortune not a privilege, said the Judge)
c) Prior information on exclusion clause.
An exclusion clause can be incorporated by notice, provided it was given before making the contract. I.e. each party must be aware of an exclusion clause at the time of entering into the contract if it is to be binding
(Olley V Marlborough Court Ltd -1949)
Facts: H and W arrived at a hotel and paid for a room in advanced. On reaching their bedroom they saw a notice on the wall by which the hotel disclaimed liability for loss of valuables unless handed to the management for safe keeping. W locked the room and handed the key in at the reception. A thief obtained the key and stole W’s furs from the bedroom
Decision: A notice in a hotel room