ACCA LW ^Eng Syllabus B. The Law Of Obligations - Explain The Control Over Terms - Notes ^{3 / 3}

These exempt or restrict the liability 1 party from a breach of contract

As this seems unfair - the courts don't like them

So therefore for one to be allowed it has to pass 3 tests:

Incorporated Correctly?
Constructed Properly?
Reasonable?(B2B contracts)
Fair? (B2C contracts)

Let's look at these in detail..

1. Incorporated Correctly?

   This basically means BEFORE any agreement is made

   NB. If something is signed (even though not read) - it is presumed you've read it

   • So a notice board with an exclusion clause has to be there at the time of the agreement

     The case for this is Olley v Marlborough Court Hotels

   • If a ticket has an exclusion clause on the other side of it - then the ticket has to be shown before agreement

     The case for this is Chappelton v Barry

   • Verbal statements override any written exclusion clauses

     The case for this is Curtis v Chemical Cleaning

2. Constructed Properly

   This means clearly worded

   • Ambiguity in wording will go against the person relying on the exclusion clause

   • This is called the Contra Proferentum Rule

     The case for this is Houghton v Trafalgar Insurance

3. Reasonable? - Business to Business Contracts

   This is from UCTA 77

   Exclusion clauses on death and personal injury are always ignored by courts

   To see if other exclusion clauses are reasonable - courts look at:

   • Relative Bargaining Strengths of the 2 businesses

   • Any inducements (eg discounts) to allow for an exclusion clause

   • Did both parties know about the clause?

   • Are the goods bespoke?

4. Fair? - Business to Consumer contracts

   This is from CRA 2015

   Exclusion clauses on death and legal rights are always ignored by courts

   To see if other exclusion clauses are fair - courts look at:

   • Significant differences in each others' obligations?

   • Prominent and simply worded clause?

   • Any disproportionate compensation to be paid?

   • Opportunity for the consumer to read the clause?

   • Can the business unilaterally change the terms and price?