Exclusion Clauses:

An exclusion clause, also known as an exemption clause, is a provision in a contract that limits
or excludes one party's liability for certain types of breaches or losses that may occur during the
course of the contract. These clauses are often used to protect one party from financial or legal
consequences in case of a breach or failure to perform.For a contract to be legally binding, there
must be a meeting of the minds, which means that both parties must agree to the terms and
conditions of the contract. This agreement is typically manifested through the offer and
acceptance process. Inclusion of an exclusion clause as part of the contract ensures that both
parties are aware of and consent to its terms.

This was illustrated by the case of spurling v bradsgaw [1956] EWCA Civ 3: Spurling ltd had a
warehouse in East Africa London. Mr. Andrew Bradshaw had seven barrels of orange juice. He
asked Spurling Ltd to store them. In the receipt was the clause which exempted warehousemen
from liability due to their negligence. When the barrels were collected, they were damaged and
the orange juice was unusable. When Bradshaw refused to pay Spurling Ltd, the company sued
for the cost. Bradshaw counter claimed for damages for breach of an implied term of contract of
bailment to take care reasonable care and negligence.

The issue before court was whether the exclusion clause was part of the contract?

Hence Lord Denning stated verbatim that “I quite agree that the more unreasonable a clause is,
the greater the notice which must be given of it. Some clauses which I have seen would need to
be printed in red and ink on the face of the document with a red hand pointing to it before the
notice could be held to be sufficient and hence

Exclusion clauses is a contractual term that forms part of a contract which attempts to either
limit or exclude a party's liability to the other .The court always requires a person relying on the
exclusion clause to show that it was brought to the attention of the other party and that agreed to
it at or before the time when the contract was made.

Otherwise, it will not form part of the agreement.

Denning LJ emphasized the importance of the parties having in relation to the clause, intention to
create legal relations. He stated that the best way of proving it is by written document signed by
the party to be bound. Another way is by handling him before or at the time of contract. A
written notice specifying its terms and making it clear to him that the contract is on those terms
or a prominent public notice which is plain for him to see when he makes the contract or an
express oral stipulation would no doubt have the same effect.

The reasonableness and the validity of the exclusion clauses is discussed below.

Reasonable care must be taken to bring it to the attention of the contracting party at the time of
the contract.
 Court requires a person relying on the exclusion clause to show that it was brought to the
attention of the other party and that party agreed to it at or before the time when the
contract was made. Otherwise, it will not form part of the agreement.Thus in in the case of
Olley V Marlborough Court Ltd [1949] 1 KB 532

Reasonableness of the clause

In circumstances where the clause protects the party who has failed to carry out the basic
obligation of the contract, the court will not allow him to rely on the exemption clause to escape
liability. The exclusion clause must therefore not stop the party making it from performing his
duties on reliance on the unfair clause. Thus in the case of Karsales Ltd Vs Walis [1956] 1 WLR
936 the defendant inspected a car; it was in good condition and agreed to buy it. The agreement
contained the following clause "no condition or warranty that the car is road worthy or so to its
age, condition or fitness for any purpose is given by the owner or implied herein". When delivery
of the car was made, it was in a shocking condition and incapable of self -starting. The defendant
refused to accept the car contending that it was unfit. The plaintiff sued him relying on the
exemption clause. It was held that as the breach went to the root of the contract it was so
unreasonable and could not entitle the plaintiff to rely on it.

Where an exception clause is printed at the back of the receipt it is not valid unless it is brought
to the attention of the other party

If the exclusion clause is in a written document, it’s only effective if it is contained in a

In Chapleton V Barry UDC (Urban Development Council) (1940), where the plaintiff hired a
desk chair, paid 2 dollars and obtained a ticket which he put into a pocket without reading. It was
printed at the back that the defendant will not be liable for any accident or damage, arising from
the use of the chairs. But where the chairs were picked from, there had been a notice above but it
merely told people to get tickets from the chair attendant and that they retain them for inspection.
When the plaintiff sat on the chair, it collapsed and he was injured. He sued the defendant. It was
held that the printed clause at the back of the receipt could not become part of the contract as no
reasonable care was taken to bring it to the attention of the contracting party, the plaintiff was
entitled to damages. The court further held the exemption clause did not protect the Council.
This is because a ticket was merely a receipt or voucher for the money paid for the hire of the
chair, the only conditions upon which the chairs were hired out were those contained in that
notice which contained no limitation of liability for any accident or damage arising from the hire
of chairs, the council was liable. It was noted that the ticket was no more than a receipt and was
quite different from the ferry ticket which contains upon a company agrees to carry the
passengers. Where the ferry ticket on its face had the words “for conditions see back” and it was
held to bind the plaintiff who being illiterate could not and did not in fact read them. The ferry
ticket was said to be the actual contract evidencing the terms upon which the Ferry Company had
agreed to carry the passenger. In other words, it was a contractual receipt and not merely a
receipt evidencing payment or a mere voucher .When the exclusion clause is printed in red ink
on the face of the document with a red hand pointing to it and a person is induced to sign it by
fraud or misrepresentation, he is not bound by any exclusion clauses contained in the document.
See Estrange V Graucob [1934] 2 KB 394

Where a person is convinced to sign a contract by Fraud he is not bound by any exclusion clause
contained in the document.

Where the party has been misrepresented as to the meaning of the clause, then he is not bound by
his signature since such signature is not due to the intention of the party signing and therefore
cannot be enforceable. Thus, in Curtis v Chemical clearing dyeing co. The plaintiff took a
dress to the defendant company for cleaning. She was told to sign a receipt she asked why and
was told by the defendants that they would not accept any responsibility for damage to the beads
and sequins on the dress. In fact, the document contained a clause stating that the article is
accepted on condition that the company is not liable for any damage however arising. When the
dress was collected, it was stained and an action for damages was instituted. It was held that the
defendant could not rely on the signed document because the sign was obtained by
misrepresentation.

This therefore requires that a party who wishes to use an exclusion clause must ensure it is clear
and wide enough to protect him in a particular instance which he has in mind.

Another important principle on exclusion clauses is the contra proferentum rule which also
applies to limit the validity of an exclusion clause. This rule means that once the court
determines that the clause was duly incorporated into the contract, it must then turn to the
question whether it covers the particular breach of contract which has now occurred. If a clause
is vague such that it does not cover what the defendant wants to exclude, the court will interpret
it against him thus if words are ambiguous they will be interpreted in a way less favorable to the
party who wants to rely on the clause. This therefore requires that a party who wishes to use an
exclusion clause must ensure that it is clear and wide enough to protect him in the particular
instance which he has in mind .thus in the case of Hollier v Rambler Motors (AMC) Ltd ., The
defendant agreed to repair Mr Hollier’s motor car. While at the defendant’s garage, the car was
damaged in a fire caused by the defendant’s negligence. The defendant sought to rely on a clause
stating, ‘The Company is not responsible for damage caused by fire to customers’ cars on the
premises’. The Court of Appeal held that the clause was not incorporated into the contract but, in
any event, it was not clear enough to exclude the defendant’s liability. Lord Justice Salmon (at p.
81) stated:
The ordinary man would I think say to himself: ‘Well, what they are telling me is that if there is
a fire due to any cause other than their own negligence they are not responsible for it.’ To my
mind, if the defendants were seeking to exclude their responsibility for a fire caused by their own
negligence, they ought to have done so in far plainer language than the language here used.

More so, the principle is that the more unusual or least expected the clause is, the higher will be
the notice required to be incorporated.

In Crooks v.Allen, it was held that the person relying on a term least expected should make it
conspicuous or take other steps to draw attention to it.