Exclusion cases

L’estrange v graucob

{{signator singed hire purchase agreement-not read it-contained small print of exclusion
clause.machine defective.no remedy.signed exclusion}}

Thomas v LMS
The claimant was injured whilst stepping off a train. The
railway company displayed prominent notices on the
platforms excluding liability personal injury and damage to
property due to negligence. The tickets also stated they
were subject to terms and conditions displayed on the
platform. The claimant was illiterate and could not read the
signs. She argued that the exclusion clause was not
incorporated into the contract as the railway company had
not brought the clause to her attention at the time the
contract was made.

Held:

The clause was incorporated. There is only a requirement to

take reasonable steps to bring the clause to the attention of
a reasonable person. There was no duty to ensure that every
traveller was aware of the clause. The claimant was
therefore unsuccessful in her claim for damages.

Hollier v Rambler
C-used the services of the defendant garage on 3-4 occasions over a five year period. Each time
he had been asked to sign a document excluding liability for any damage. On this occasion the
contract was made over the phone and no reference to the exclusion clause was made. The
garage damaged the car during the repair work and sought to invoke the exclusion clause
through previous dealings.
There was not a sufficient number of or regularity of transactions to amount to a previous course
of dealings capable of incorporating the exclusion clause. It was not reasonable to expect the
claimant to remember the clause from one transaction to the next. Consequently the garage was
liable to pay for the damage.

Curtis v chemical cleaning

{{Curtis-wedding dress-inquired abt document excluding liability-misrep abt document-no

liability for beads and sequins.signed.stains.misrep abt effect of clause}}

Peekay intermark v australia

Investment-misrep
-misrep corrected in written document.
D signed the document but did not read it
They relied on earlier misrep
If they had read written contract they would have realised corrrection

parker v south eastern railways

. {{cloakroom-bag.ticket for 2d.ticket-See back.clause limiting liability to 10.clause
effective.brought to reasonable notice of D}}

olley v malborough court

{{hotel.reception desk-contract formed there.Later inside hotel room on wall-exclusion

clause.Ineffective.Brought to attention too late.}}

Chpelton v barry

Deck chairs.ticket- back of ticket contain terms.ticket=receipt of payment.acknowledgment.no

reasonable notice.

sugar v lms
Words “see back”was hidden by date stamp on ticket.
interfoto v stiletto
5dollars per picture delayed was onerous term
Explicit attention=reasonable notice-
-expensive -not hidden-plain notice
Spurling v bradshaw
Orange juice barrel.After contract concluded exemption clause sent.Incorporated into
contract.Parties contracted for several years in past.
D-used warehouse on a regular basis. Each time- asked to sign exclusion clause. This invoice
came after the contract had been agreed. The defendant argued the clause had not been
incorporated into the contract as he signed the document after the contract was made.

clause incorporated through previous dealings.D- aware of term from the previous contracts

McCutcheon v MacBrayne
C car sank in a car ferry owned by D. C used the car ferry on a few occasions previously.
Sometimes asked to sign a document sometimes not. On this occasion he had not been asked to
sign a document. D- exclusion clause incorporated through previous dealings.

no consistency in the course of dealings and therefore the clause was not incorporated. British
Crane Hire v Ipswich Plant Hire [1975] QB 303

Both parties-business of hiring out plant machinery. D-needed a dragline crane-contacted C to

hire one. crane sank. The contract concluded over the phone. A copy of the terms and conditions
of hire were handed to the D on delivery of the crane, although the defendant had not yet read
or signed it. The contract specified that the risk of hire remained with the hirer.

The term relating to risk-not incorporated.D-unaware of it at the time the contract was made,
however, the court implied the term into the contract as both parties were in the business of
plant hire and it was known to both that the use of such terms was prevalent in the trade.

Houghton v Trafalgar
6 ppl in car having capacity of 5.”LOAD”

Middleton v Wiggins
C owned landfill. rotting waste-> gases-> explosion,destroyed nearby house. C-compensate
house owner and sought to claim on his insurance policy.insurance company -rely on a clause-
they would not accept liability for "loss arising from the disposal of waste".
the courts decided the loss arose from 'production of gas' which meant C couldn't rely on the
exclusion clause.

Ailsa Craig v Malvern

contract between Securicor and Aberdeen Fishing Vessel Owners Association. Securicor -provide
security cover in the harbour where the C's vessels were moored. As a result of negligence and
breach of contract the claimant's vessels sunk. The contract contained a limitation clause that
limited liability for negligence and breach of contract to a specific amount.
Where a clause limits liability rather than excludes liability altogether the courts should apply the
natural meaning of the clause.

White v John Warwick

C-hired cycle from D. written agreement stated=Nothing in this agreement shall render the
owners liable for any personal injury". C riding cycle, the saddle tilted forward-injured.D- liable in
tort for negligence as well as in contract.
Where an exclusion clause seeks to exclude liability for negligence, it must state so clearly. If
there is any ambiguity then the court will apply the contra preferentum rule

Alderslade v Hendon Laundry

C sent 10 handkerchiefs to D-laundry.D lost handkerchiefs and C claim back £5 in damages.D -
rely -term in the contract 'The maximum amount allowed for lost or damaged articles is 20 times
the charge made for laundering. In this case the maximum was just over 1/10th of what was
being claimed.

A clause that does not expressly mention negligence can exclude liability for negligent
performance if there is no other type of liability to which the clause can apply

Unicaja Banco SA v Hidalgo Rueda

such terms will not be binding and that when possible the contract will continue to apply without
them.
Spanish banks wrote mortgage contracts which contained a term setting high default interest
rates and a term allowing a lender to demand immediate payment if the borrower fails to meet
his payment obligations.
directive stipulates that a national court can invalidate certain terms in a consumer contract if it
finds them unfair. However, the directive specifies certain terms (for example relating to
'subject-matter' or 'price') which are excluded from this provision so long as they are in 'plain
intelligible language'; that is, a national court cannot invalidate them on grounds of unfairness
providing they are in plain intelligible language.

Declare void terms found unfair

Not binding
Rest of the contract continues without them
Certain terms-price and subject matter-as long as they are in plain and intelligible lang-are
excluded from unfairness assesment

Kásler v Jelzálogbank
National court delete term found unfair
Supplement that term with another
national court to cure the invalidity of that term by substituting for it a supplementary provision
of national law.

OFT v Abbey National

 “Core terms” of the contract are not subject to fairness assessment
 Provided that they are in “plain intelligible language” or are “transparent and
prominent”
 Term in plain intelligible language must be such that it enables “a typical consumer to
have proper understanding of term for sensible and practical purposes.”
 Core term is defined as “relating to subject matter of the contract or adequacy of price”
In the case bank charges were a core term so was not subject to assessment of fairness.
Director General of Fair Trading v First National Bank
D bank’s standard terms for loans included a term governing the consequences of borrower
defaulting on their payments. It provided that interest would continue to be payable at a
particular rate until the bank was able to discharge any judgment obtained against the debtor.
This term would apply even if the court extended the time for repayment of the loan.
C thought that the average consumer would not notice the term.

D responded that its terms did not fall within the scope of regulation 4 because it was a ‘core’
term under regulation 3. Regulation 3 prevents the courts from assessing the fairness of any
term which ‘defines the main subject matter of the contract’.

HOL:allowed the appeal by the bank. Held: since there was not significant imbalance between
the rights and the obligations between the contracting parties, the term was not unfair. When
assessing whether the term is unfair or not, the court is required to decide whether the supplier
dealt the matter in good faith and in an open manner.

A fairness assessment in the consumer rights context involves looking at both the fairness of the
contract’s substance and the making of the contract. It is therefore both a substantive and a
procedural assessment.

this did not represent a core term under the Regulations notwithstanding the fact that it was an
agreed term representing the price of remuneration.
Lord Steyn:

"article 3(2) must be given a restrictive interpretation. Unless that is done article 3(2)(a) will
enable the main purpose of the scheme to be frustrated."the adequacy of the price of
remuneration" must be given a restrictive interpretation."

Lord Bingham:
"Good faith in this context is not an artificial or technical concept... It looks to good
standards of commercial morality and practice. It lays down a composite test, covering both
the making and the substance of the contract, and must be applied bearing clearly in mind
the objective which the regulations are designed to promote. Fair dealing requires that a
supplier should not, whether deliberately or unconsciously, take advantage of the
consumer's necessity, indigence, lack of experience, unfamiliarity with the subject matter of
the contract, weak bargaining position"
 There is a ‘significant imbalance’ where the term is so heavily weighted in favour of the business
that it tilts the parties’ relationship in their favour. This is assessed by reference to the whole
contract.
 ‘Good faith’ refers to ‘fair and open dealing’. It requires clauses to be expressed fully and clearly,
stressing any elements which might be disadvantageous to the consumer. It also requires the
business to avoid, deliberately or otherwise, taking advantage of the consumer’s weaker
bargaining position.

->Not core term-so not subject to exclusion

->restrictive interpretation
->assess fairness in both procedural and substantive manner
->substantive=substance of the contract.Procedure=making of contract.procedure
1.->term fair-if made in good faith and open manner.Clauses expressed fully and clearly.Not
exploit consumer.Not disadvantageous to consumer.Not deliberately or otherwise take adv of
consumer necessity, indigence, lack of experience, unfamiliarity with the subject matter of the
contract, weak bargaining position-Lord Bingham
2.->not significant imbalance-heavily weighed in favour of business.

EE Caledonia v Orbit Valve

D agreed to carry out work on P’s oil rig, subject to the clause that “any claim… or liability…
arising by reason of… death of any employee… of the indemnifying party, resulting from or…
connected with the performance of this order”. One of D’s employees died due to P’s negligence
and P paid a settlement to the deceased’s family, and then claimed the settlement money from D
under the clause. CA rejected P’s claim, since the clause was to allocate the risk so that each
party would be liable for his own negligence. Thus P couldn’t force D to pay for P’s negligence.

Steyn LJ: He approves the dictum of Lord Morton that regarding exemption/indemnity clauses,
(1) an express exemption of P from liability in cases of negligence is effective; (2) if negligence is
not mentioned expressly the court must consider whether the terms used are wide enough to
cover negligence cases; (3) If they are wide enough, then the court must consider if, realistically,
there is another head of damage under which the exemption clause could be invoked, then P
cannot rely on it in negligence claims.

Stewart Gill Ltd v Horatio Myer

Stuart-Smith LJ explained that s.11(2) requires the court to have regard
to the factors listed in Schedule 2 of the Act when determining
reasonableness under sections 6 and 7. However, the judge also thought
that those factors ‘are usually regarded as being of general application to
the question of reasonableness.’ The court may therefore take them into
account when applying other provisions, such as sections 3 and 13.

Courts will assess the clause as a whole, not just the part alleged to be unreasonable. Section 11(1)
reinforces this, that the relevant time is when the contract was made, not the time of breach.