An Exemption or exclusion clause is also a relevant term of a contract. Exclusion clauses are used to eliminate or restrict liability under a contract. For example a contract between party A and B might state that party A is not liable to party B if something goes wrong. A party who wishes to rely on an exclusion clause must abide by some statutory requirements and prove that it does form part of the contract. If you sign a contract and an exclusion clause is included you are then legally bound, whether or not you read or understood the terms of the contract. Complications often occur with exclusion clauses when they are contained in an unsigned document like a ticket. In such circumstances sufficient notice of the clause needs to be given. In short terms an exclusion clause is almost like a disclaimer stating enter at you own risk. The law disfavours these clauses as it frees people from responsibility, however they will allow them if they are written correctly and both parties understand the agreement.
1. The clause must be contained in a contractual document
2. The existence of the exclusion clause must be brought to the notice of the other party before of at the time the contract is entered into.
3. Reasonably sufficient notice of the clause must be given. It should be noted that reasonable, not actual, notice is required.
4. What is reasonable is a question of fact. It depends on all the circumstances and the individual situation.
(Dosen 2007)
Exclusion clauses are said to be extremely unfair to the party entering into the contract who has no choice but to accept them. An example of the unfairness of an exclusion clause would be if you decided to go bungy jumping. You then made a contract with the bungy jumping company. The question then is, can the company turn around and say that there is a clause in the contract that states that in the event that the bungy cord breaks for instance they are not liable even if the the cord breaking is due to their negligence.
(Contract Law - Exemption Clauses Part 1, 2012)
A case that outlines the affect exclusion clauses can have on consumers forming contacts is;
Curtis v Chemical Cleaning Co [1951]
The plaintiff took a wedding dress to be cleaned by the defendants. She signed a piece of paper headed 'Receipt' after being told by the assistant that it exempted the cleaners from liability for damage to beads and sequins. The receipt in fact contained a clause excluding liability "for any damage howsoever arising". When the dress was returned it was badly stained. It was held that the cleaners could not escape liability for damage to the material of the dress by relying on the exemption clause because its scope had been misrepresented by the defendant's assistant.
(Exclusion clauses cases, 2003)
1. The clause must be contained in a contractual document
2. The existence of the exclusion clause must be brought to the notice of the other party before of at the time the contract is entered into.
3. Reasonably sufficient notice of the clause must be given. It should be noted that reasonable, not actual, notice is required.
4. What is reasonable is a question of fact. It depends on all the circumstances and the individual situation.
(Dosen 2007)
Exclusion clauses are said to be extremely unfair to the party entering into the contract who has no choice but to accept them. An example of the unfairness of an exclusion clause would be if you decided to go bungy jumping. You then made a contract with the bungy jumping company. The question then is, can the company turn around and say that there is a clause in the contract that states that in the event that the bungy cord breaks for instance they are not liable even if the the cord breaking is due to their negligence.
(Contract Law - Exemption Clauses Part 1, 2012)
A case that outlines the affect exclusion clauses can have on consumers forming contacts is;
Curtis v Chemical Cleaning Co [1951]
The plaintiff took a wedding dress to be cleaned by the defendants. She signed a piece of paper headed 'Receipt' after being told by the assistant that it exempted the cleaners from liability for damage to beads and sequins. The receipt in fact contained a clause excluding liability "for any damage howsoever arising". When the dress was returned it was badly stained. It was held that the cleaners could not escape liability for damage to the material of the dress by relying on the exemption clause because its scope had been misrepresented by the defendant's assistant.
(Exclusion clauses cases, 2003)