0106exclusion Clause

Exclusion Clauses Exclusion Clauses

Standard form contract Standard form contract • The standard form contract is a standard The standard form contract is a standard document containing terms and conditions on which they contract with their customers. which they contract with their customers • Th i di id l The individual must usually take it or leave it ll k i l i because the supplier is the only supplier in the market. Pg 115 k P 115

• For example, you have no choice but to sign For example, you have no choice but to sign on the standard form contract if you want to advertise in, say, newspaper or TV station even though if you don't agree with some of the terms. • One of the problems with standard form contract is that the dominating party tries to exclude liability for the terms in the contract

Exclusion clause Exclusion clause • A clause in a contract which purports to A clause in a contract which purports to exclude liability altogether or to restrict it by limiting damages or by imposing other limiting damages or by imposing other onerous conditions. • Also known as exemption clause Also known as exemption clause Pg 115

Exclusion clauses • The courts generally seeks to protect The courts generally seeks to protect consumers from the harsher effects of exclusion clause in two ways: exclusion clause in two ways: – Exclusion clauses must be incorporated into a contract before they have legal effect contract before they have legal effect – Exclusion clauses are interpreted strictly. This may p e e app ca o o c ause prevent application of clause Pg 115

Consumer protection Consumer protection • The law also seeks to protect consumers who are The law also seeks to protect consumers who are usually the weaker party to the contract from the full force of exclusion clauses. • The person who uses a standard form contract in dealing with a consumer cannot, unless the term dealing with a consumer cannot, unless the term is reasonable, restrict liability for his own breach. • For example, a clause attempts to restrict liability For example, a clause attempts to restrict liability for other loss or damage arising from negligence is void unless it can be shown to be reasonable.

The courts The courts • The courts usually to look at the terms in the e cou ts usua y to oo at t e te s t e exclusion clauses if: – They are not against statute; and – They are not ambiguous; and • If the terms are ambiguous, the court may interpret any ambiguity against the person at fault who relies on the ambiguity against the person at fault who relies on the exclusion – They are reasonable • I th Is the content reasonable? t t bl ? • Has the content been reasonably brought to the attention of the customers?

Unfair contract terms act 1977 Unfair contract terms act 1977 • Any clause that attempts to restrict for death or Any clause that attempts to restrict for death or personal injury arising from negligence is void • Any clause that attempts to restrict liability for Any clause that attempts to restrict liability for other loss or damage arising from negligence is void unless it can be shown to be reasonable void unless it can be shown to be reasonable • Any clause that attempts to limit liability for breach of contract, where the contract is based breach of contract, where the contract is based on standard terms or conditions, is void unless it can be shown to be reasonable Pg 121 g

Void by statute ‐ Pg 121 by statute Pg 121 • If an exclusion clause is made void by statute it is If an exclusion clause is made void by statute, it is unnecessary to consider how other legal rules might affect it. There is simply no need to assess g py whether it is reasonable • Those exclusion clauses in the standard form contract may be void if they are against statute. contract may be void if they are against statute. – E.g. a clause to exclude death or personal injury resulting from negligence is void

Clauses Void by statute Pg 121 Clauses ‐ Void by statute – Pg 121 • A clause which exclude and limit liability for c ause c e c ude a d t ab ty o death or personal injury • A guarantee clause excludes or limit liability for g y loss or damage caused by defect of the goods in consumer use • Hire purchase – exclude the condition that the seller has a right to sell the goods • S l f Sale of goods to consumers – exclude or limit d t l d li it liability for breach of conditions relating to description, quality, fitness description quality fitness

Unfair terms to consumers Unfair terms to consumers • An unfair term is any term which causes a An unfair term is any term which causes a significant imbalance in the parties’ right and obligations under the contract to the detriment of the consumer • E.g. High pressure selling without a “cooling down” period Research at google – Singapore’s “unfair contract terms act”

Assignment 1 Claim 5 Assignment 1 – Claim 5 • Discuss – 2c

Case Case ‐ Cheapfit • Two issues Two issues 1. John’s car was damaged after the service at Cheapfit. Cheapfit 2. John was severely injured by Cheapfit employee negligently • Cheapfit denied liability by use of the liability denied liability by use of the liability clause displayed in the premises and receipt

• What is an exemption clause? What is an exemption clause? • How do the courts look at exemption clause? d h l k i l ? Discuss. • Advise John about his legal position for the g p two issues with Cheapfit

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0106exclusion Clause

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