Contents

Exclusion Clauses and Limitation Clauses..............................................................................................2

Incorporation.........................................................................................................................................2
Construction..........................................................................................................................................9
Statutory Controls and reasonableness check the PDF.......................................................................11
Exclusion Clauses and Limitation Clauses
 Exclusion clause
o Is a clause in a contract that parties can put to not be liable
o It excludes liability completely
o E.g. “Person A does not take any legal responsibility”
o E.g. “If you are injured for using this room, the management would not be liable
 Limitation clauses
o Limits a person’s liability to a certain amount
o Limits the damages a person can claim
o Talks about the limit of money
 Governed by:
o Unfair Contract Terms Act 1977 (UCTA 1977)
 Protects consumers from unfair terms in a contract
o Unfair Terms in Consumer Contract Regulations (UTCCR 1999)
o Consumer Rights Act 2015 (CRA 2015)
 Should something goes wrong, this tells people what to do
 Factors to consider (have to satisfy all 4):
o Incorporation
 Looks at whether the EC is part of a contract
 Whether it was put in the clause
 If it is written down, then there is no issue, but it is not that simple
 If it is unwritten, then it is had to determine which term is an EC
o Construction
 Looks at how the words are interpreted to overcome the breach
o Reasonableness
 Whether the terms are reasonable
 What are the standards of reasonable?
o Statutory Controls
 What statute has control over the EC?
 What are the statutes/regulations that have effect to the EC

Incorporation
 the term must have been successfully incorporated into the contract. Only following
incorporation will that term become a part of the contractual obligations.
 There are two types of documents
o Signed document
 if the exclusion clause is included in a contract which has been signed, this
will be held as incorporated into the contract
 The parties will be bound by all of the terms whether they have read it or
not
 Signature is important
 If a person signs it, that person is bound by it
 Disadvantage: the person might miss some thing out from the terms and
conditions
  The signature binds the person regardless whether he read it or not
 Case: L’estrange v Graucob [1934]
 P purchased a cigarette vending machine. There was an EC saying
that the machine was faulty. P said that the D breached the Sale of
Goods Act (SOGA). D asserted that the statute was made irrelevant
by the EC and that he did not breach the contract. P said she was
unaware of the clause as she had not properly read the agreement
and it ought to not apply. Court held that the P’s action failed as she
had signed the contract, therefore, she was bound by the terms.
Lord Justice Scrutton stated that the EC formed part of the contract.
 This case outlines the importance of a signature to the
contractual document. It is held that if a party signs a
document containing contractual terms, they are wholly
bound. The terms are incorporated, and it is immaterial
whether or not they read the document
 Case: Curtis v Chemical Cleaning & Dyeing Co (1951)
 P took a dress to be dry cleaned. There was an EC on the receipt and
the store assistant told her that the EC is there and that it was for
beads and sequins only, however, in actuality, the exclusion of
liability clause pertained to all possible damage that may befall a
garment whilst being cleaned. P took back the dress and found
stains. Court held that a clause ought not to be deemed legally
enforceable where the drafting party misrepresents the effect of a
clause to the other party.
 This presumption (of the L’estrange case) is limited in that the
signature will not bind if it is fraudulently obtained or is subject to a
misrepresentation, as shown in Curtis v Chemical Cleaning and
Dyeing Co [1951] 1 KB 805, where the receipt for a dress excluded
all liability for damage. The customer only signed the receipt
because the assistant misrepresented the terms as applying to
damage to the beads and sequins on the dress.
o Unsigned document
 Issues will arise when it is an unsigned document
 This looks at whether the clause was brought to the attention of the parties
 There is no written contract
 for unsigned doc, u need to look at a few factors - u dont have to satisfy ALL
5. just use wtv is suitable
 Element 1: Time
 This is the first element to consider
 The time the EC was brought to the attention of the parties is
important
 Must be before or at the time the contract was made and not after
 when was the EC brought to the attention of the party. so the TIME
becomes very important. it must be b4 or at the time the contract is
entered into
 Case: Olley v Marlborough Court (1949)
 o Involved guests at the hotel. In the hotel room, at the back
of the door, there is an EC stating that the hotel is not liable
for damages or loss of property. When Olley left his room,
someone stole his items. The hotel is relying on the EC. The
EC should be brought to the attention before or at the time
the contract is entered to. In this case, the EC came after.
o The reasonable notice must be given either before or at the
time of contracting. In this case, a hotel excluded liability for
the loss of personal possessions of the guests. This notice
was on the doors of the hotel rooms. The contract was
formed at the hotel desk; therefore, the notice was deemed
to be after the formation of the contract, and the exclusion
could not be relied upon.
 Element 2: Course of dealings
 if there has been consistency in dealings between two parties over a
certain amount of time, the normal terms of the contract will be
considered to be incorporated despite no actual express
incorporation.
 were there prev course of dealings bet the parties. if there were
prev course of dealings that were consistent and continuous with
the EC then that could also incorporate the EC
 looks at whether the terms can be incorporated through previous
course of dealings
 for it to apply, the dealings must be consistent and continuous
 There are some occasions where notice of terms will not be required
to be given. This will be on the basis that the parties have had a
previous course of dealings, and therefore will be aware of all the
relevant terms. Where parties regularly contract with consistency in
terms and conditions, the terms may be held to be incorporated
(cite Hardwick)
 case: Hollier v Rambler (1972)
o P had repaired his car at the D’s workshop 3 or 4 times over
the span of 5 years. Sometimes he would sign a document
with the EC. Court held that no previous dealings due to it
being insufficient to enter into a contract.
 Case: Hardwick Game Farm v Suffolk Agricultural Poultry Producers
Association [1969]
o This case showed that there were more than 100 notices
given over the span of 3 years. The court held that it was
sufficient to constitute as previous course of dealings
because it was consistent and continuous
 Case: McCutcheon v David MacBrayne Ltd [1964]
o was a case in which the consistency in the dealings was not
sufficient. In the past course of dealings, there was
inconsistency in whether one party was required to sign a
“risk note” which included an exclusion clause. In the
particular dealing where the other party attempted to rely
 on this clause, the risk note was not signed. The court could
not incorporate the term due to the inconsistency of the
dealings, as the dealings only sometimes required the risk
note to be signed.
 Case: J Spurling Ltd v Bradshaw [1956]
o B sent 8 barrels of orange juice to S. S sent B a receipt with
conditions written on it that contained a clause purporting
to exclude liability for any losses resulting from their
negligence. B fell into arrears with his payments and S
brought an action to recover the money. The juice was
spoiled and B counterclaimed in negligence. Even if they had
been negligent, they would be able to rely on the exclusion
clause to avoid liability. Sufficient notice of the clause had
been given so as to make it a term of the contract.
Exemption clauses will operate to protect a party only
where he is carrying out his contract and not where he is
deviating from it in a fundamental respect
o Sufficient notice refers to the terms being present at some
point in the previous dealings. In Spurling v Bradshaw
[1956] 1 WLR 461, the parties had dealt with each other for
a number of years. After every contract, Party A sent Party B
a “landing account” which excluded their liability. Due to the
fact there was such a large amount of previous dealings, this
term was held to be included in all of the following
agreements.
o The parties in Spurling v Bradshaw had dealt with each
other for a number of years, but it is unclear exactly how
many dealings are required to result in a decision such as in
Spurling v Bradshaw. The case of Hollier v Rambler Motors
(AMC) Ltd [1972] 2 QB 71 confirmed that three or four
dealings over five years did not result in any terms being
implied due to previous course of dealings.
 Element 3: Requirement of reasonable notice
 In order for a term to be incorporated into the contract, the party
who it confers obligations upon must be or ought to be aware of its
existence.
 It is important that notice must be given
 there is a requirement of reasonable notice. u must give reasonable
notice as to the existence of the EC. u dont hv to give actual notice
but to a certain extent, u need to inform the other party that there
is an EC
 Reasonable notice is an objective consideration of whether the party
subject to the terms are aware of the terms. There is no
requirement that the party must be privy to the actual contents of
the terms, the need only be aware of the fact that they exist
 Actual notice – the terms are on the ticket
  Reasonable notice – not giving actual notice, but informing the
person that there is an EC
o E.g. tells us where to find the EC – this is sufficient
 Case: Thompson v London, Midland and Scottish Railway Company
(1903)
o T cannot read. T travelled. On the back of the ticket,
contained a clause purporting to exclude liability for any
injuries to passengers. T slipped and sustained injuries.
Court held that it was irrelevant that she was unable to
read. The company had taken sufficient steps to bring the
terms to customers’ attention in clear and legible print.
Accepting the ticket for travel constituted acceptance of the
terms of travel, and the reference to the time tables
amounted to adequate notice of the existence of the terms
and of their contents
o This objective consideration is highlighted particularly in this
case where it was held to be irrelevant that the individual
was illiterate if this fact is not known by the party supplying
the document with the terms. If it was, for example, plainly
obvious that the individual was blind, the term would not be
incorporated.
o Terms can also be incorporated by referring the party to a
different document which has the terms in. this case
highlights this, the ticket stated “subject to conditions set
out in timetables”. Although the actual contractual
document did not have these conditions in, the reference
was enough to objectively incorporate them.
 Case: Parker v South Eastern Railway (1877)
o P paid to leave his bad with S. there was a notice in the
room: SER would not be responsible for any deposits
exceeding 10 pounds. The tickets had the same notice on
them. P’s bag exceeded 10 pounds. P argued that he had
not seen the notice in the cloak room and had not read the
terms on the ticket. As such, SER should not be able to rely
on the exclusion clause because it would be unreasonable to
expect customers to know that a receipt for deposited
goods contains special conditions. The judge’s direction at
first instance that Parker was not bound by terms he had
failed to read was incorrect. Parker would not be bound by
terms he did not know were printed on the ticket.
o This case ruled that if the document received is one that
would normally contain contractual terms in, and it would
be common knowledge that this would be so, the party
receiving the document would be assumed to have notice.
 Element 4: Notice for the unusual EC
 for specific situations of unusual EC, the red hand rule applies.
meaning to say the more unusual the EC, the more likely u hv to
bring it to the attention of the parties
 must be given notice for anything that is not normal
 anything extreme must be informed to the parties about the
unusual clause
 the more unusual the EC, the greater the amount of notice needs to
be given
 case: Spurling v Bradshaw
o established the red hand rule
o Lord Denning:
 Some EC needs to be printed out in red ink with a
red hand pointing to it before the notice could be
held sufficient
o i.e. the EC needs to be brought to the attention of the
parties
 case: Thornton v Shoe Lane Parking (1971)
o P parked his car at D’s auto multistorey carpark. The words
“issued subject to conditions displayed on premises” were
written behind the ticket. The notice at the carpark included
an EC that excluded liability for anyone’s injury. P was
injured and raised the EC.
o Court held that the D could not rely on the clause bec:
 The ticket was not more than a receipt bec it was
issued by an auto machine. It’s not possible to
return it. So, the ticket came too late to incorporate
new terms.
 It was assumed that the contract took place at the
time P took the ticket, so the notice came in too
late.
o One unique circumstance of incorporation and notice
relates to ticket machines. This case has affirmed the fact if
terms of a contract are included on a ticket which is printed
after the money has been paid, the contract has been
formed already, and therefore the terms are not
incorporated. Following, the terms relating to contracts
through automated machines must be made clear before
the ticket has been purchased, perhaps by a sign or another
form of notification
 Case: Interfoto Pictures Library v Stiletto Visual Programmes (1988)
o Refers to any solution that is out of the ordinary
o D was an ad agency. P had a pic library. D requested for 47
transparancies and that was delivered with a clause stated
that the pics were to be borrowed for 14 days. A holding fee
of 5 pounds + VAT per day per transparency. D forgot about
the transparancies until P sent an invoice of nearly 4000
pounds.
 o Court held that the condition was unreasonable and
extortionate, so in order to ensure incorporation, P would
had to have taken special steps to bring it to the D’s
attention, which here they failed to do so.
o More onerous or unusual terms have a higher standard of
incorporation. Here, a term in the contract stipulated there
would be a £5 per day late fee. The court considered this
term as onerous and unusual, and therefore would have had
to have been brought directly to the attention of the party
subject to the term.
 Element 5: Contractual Document
 if a term is included in a document in which contractual terms would
normally be found, and there is notice of the existence of these
terms before or at the time of contracting, the term will be
incorporated
 the EC in order for it to be incorporated, it must be in the form of a
contractual doc
 An EC can only be included if it is contractual in nature
 Case: Chapelton v Barry Urban District Council [1940]
o P wanted to hire deck chair on the beach. There was a pile
of chairs on the notice providing details on the price,
duration of hire and instructions to obtain ticket from the
attendant and no EC. P got the tic which contained the EC at
the back which excludes liability.
o Court held that the tic was merely a receipt and not a
contractual doc. It was only the notice next to the pile which
was capable of containing conditions.
o The offer was a pile of chairs ready to be used and the
acceptance was the action of the customer removing the
chair from the pile, so this creates a binding contract.
o It was held that the term was not incorporated into the
contract, as a ticket was a receipt, and not a contractual
document.
o Here are the two main factors to consider when assessing a
document to decide whether it is contractual:
 What the document is called is not conclusive - the
document does not have to be specifically identified
as a contract
 This document must be delivered before the
contract or at the time of the contract
 Case: Grogan v Robin Meredith Plant Hire (1996)
o Courts recognised that certain documents aren’t considered
as contractual doc but there are some circumstances where
these docs are the contractual doc.
o Auld LJ stated that a timesheet was more appropriately
termed an administrative document than a contractual one,
 and thus the average reasonable person would not expect
that any conditions stated on it are contractual in nature.
o Courts ought to also have consideration for the
circumstances of and intentions regarding the document in
determining whether it ought be legally binding.
o This case confirms that invoices, time sheets and statements
of accounts are not documents of contractual intent.
However, if one of these documents was part of the offer to
contract, they would be held to be a contractual document.

Construction
 The requirement of construction refers to the ability of the exclusion clause to cover the loss
which has occurred. As a general rule, an exclusion clause must only be construed on its
natural and ordinary meaning, as per the case of George Mitchell (Chesterhall) Ltd v Finney
Lock Seeds [1983] 2 AC 803. Alongside this rule, there are various devices of interpretation
the courts will use in order to circumvent the rule in order to provide fairness, usually in the
context of consumer and commercial relationships.
 how were the words of the EC constructed or interpreted to cover the breach.
 Used to limit the effect of the EC and ensure that the wordings aren’t vague and that they
are precise
 It looks at how the words are defined
 Strict approach to construction
o the courts apply a very strict rule of construction. they would use the literal rule
o courts will interpret strictly bec they believe that the person who created the clause
has a right to determine the terms.
 Exception greater than contained in the worlds
o Courts wont allow exception to be wider than what was stated in the EC
 i.e. don’t allow anything more than what was stated in the EC
o no wider interpretation
 looks at how the words of the EC can be interpreted to cover the breach
o case: Andrews Bros (Bournemouth) Ltd v Singer & Co Ltd
 concerns the contract of P who wants buy cars from D. there was an EC that
excluded liability. One of the cars have a substantial mileage and rendered
not to be new. D tried to rely on EC. Court stated that the exclusion of
liability for the implied terms would not exclude liability of the express
terms in the contract.
 Q: can you interpret the EC to cover that? A: No.
 Court defined so that it makes sense. They do not want it to be misused
because there are many interpretations.
 The courts are very strict in their interpretation of exclusion clauses. Here,
an exclusion clause excluded ‘all conditions, warranties and liabilities implied
by common law statute or otherwise’. The contract was for the purchase of
a ‘new’ car, but the car had a substantial amount of mileage and was not
new. The defendant attempted to rely on the exclusion clause to absolve
them of liability for selling a car that was clearly not ‘new’. The courts held
that the exclusion clause was not operable, as the clause only excluded
liability for any implied terms and the term breached was an express term.
 o Case: Wallis, Son, and Wells v Pratt
 The contra proferentum rule
o The contra proferentum rule is that where a term of a contract is uncertain and
ambiguous, the term is to be construed against the party attempting to rely on the
clause. In the context of exclusion clauses, this means the exclusion clause would be
inapplicable.
o courts would interpret the words of the EC to go against what the party is trying to
rely on
o meaning: a principle that ambiguities in documents should be construed against the
drafter. This is predicated on the assumption that a person who produces the doc
has the capacity to avoid ambiguities when drafting it.
o Case: Houghton v Trafalgar Insurance
 Car insurance policy contains an EC that excluded liability for any damages
incurred if the car carried excess load.
 Q: how do you measure the load? – could be weight or the no. of people
 Here, the car was designed to carry 5 people. At the time of the accident, it
was carrying 6 people. Insurance claimed that the excess person counted as
an excess load
 Court held that the word “load” was ambiguous, so the courts construed it
against the insurance company limiting it it to the excess weight no the no.
of people.
 In this case, an insurance policy excluded damage that occurred when the
car was carrying ‘any load in excess of that for which it was constructed’.
The claimant had six people in the car at the time of the damage, when the
car was only designed to carry five people. The courts decided that the
clause was ambiguous, due to the term ‘load’, and therefore interpreted it
in favour of the claimants. It was held to mean the total weight the car could
carry, not the amount of people, which meant the insurance claim was valid
and the exclusion clause could not be relied upon.
 The above is an excellent example of just how strict the interpretation rules
are; any ambiguity in an exclusion clause will give rise to circumstances
similar to this.
 Exclusion of liability for negligence
o courts are stricter in excluding liability
o The courts are unwilling to give effect to exclusion clauses which exclude liability for
liabilities other than contractual matters. The most common and key example for
this is exclusion clauses attempting to restrict liability for a tortious matter,
negligence.
o Case: Canada Steamship Lines v The King [1952]
 created a test which the courts will consider when assessing whether an
exclusion clause excluding liability for negligence will be valid. There are two
situations in which this may happen, which are outlined below in depth and
are very important when you are assessing clauses which exclude
negligence:
 Where the clause contains language which expressly excludes
liability for negligence.
  Where the clause does not expressly exclude liability for negligence,
but excludes damage which would be considered to be negligent
damage.
o Case: Monarch Airlines Ltd v London Luton Airport Ltd [1997]
 If the clause language explicitly refers to exemption from liability of the
consequences of negligence, the courts will uphold this type of exclusion
clause. A strict interpretation of this is required, only clauses which include
the word ‘negligence’ or a synonymous word will be given effect to. The
court held the words ‘neglect or default’ to be sufficient to be classed as
expressly mentioning negligence.
o In the absence of any express reference to negligence or synonymous words, if the
wording of the clause must be construed to cover negligent liability, only if the only
liability that arises on the facts is negligent may the exemption clause be given
effect.
 This is a rather confusing rule, and is best examined with reference to a
case. In Alderslade v Hendon Laundry Ltd [1945], a laundrette was covered
by an exclusion clause that restricted recovery for lost items to twenty times
the laundering charge of the items. This exclusion would be one that covers
a negligent liability (breach of duty to take care for the items), therefore, it
would be given effect to as long as there was no other liability on the facts.
For example, if there was a term in the contract stating “it is a breach of
contract if the laundrette loses the items”, this would mean there would be
contractual liability on the facts; therefore the negligent exclusion clause
could not be relied upon. On these particular facts, there were no other
claims for liability, meaning the exclusion clause was upheld.

Statutory Controls and reasonableness check the PDF