Terms of Contract

4 Exclusion clauses

Exclusion clause is the clause which may be inserted into the contract which aims to exclude or limit one party’s liability for breach of contract or negligence

Exclusion clause added during parking ‘’Park at your own risk’’

This clause excludes liability for damage of car and theft of car altogether.

4.1 Rules for exclusion clauses

Law has protected consumers from the harsher effects of exclusion clauses through two ways.

There are two essential rules for exclusion clauses to make those clauses valid and complete.

  1. Exclusion clause must be incorporated validly into the contract.
  2. Exclusion clauses must be interpreted completely  ( what exactly the meaning of exclusion clause)

They are sometimes referred to as exemption clause.

4.2 Incorporation of exclusion clauses

Exclusion clauses must be incorporated, it means other party must be informed of the clause otherwise it will have no worth.

Case law: Chapelton v Barry UDC 1940

4.2.1 Signed contracts

In a formal contracts making through signature, have binding terms and conditions and exclusion clauses even though other party had not read all the information regarding those terms and conditions.

Case law: L Estrange v Graucob

4.2.2 Unsigned contracts

Some contracts are informally made through general agreements; in this each party must be informed of all the terms and conditions and exclusion clauses also clearly to make it binding.

Case law: Olley v Marlborough Court 1949

4.3 Onerous terms

Some terms and conditions or even exclusion clauses have very harsh impact so they must be highlighted to make it clear to other party before the contract.

Case law: Interfoto picture Library Ltd v Stiletto Visual Programmes Ltd 1988