How to Deal with Exclusion Clauses - Contract Law

IF The problem question → exclusion clause advising (then there is a contract ⇒ Be careful, no need to work out our way to say that there was a contract.

How to approach a Contract Problem with Exclusion Clauses.

1. Don't panic.

2. As with all contract problems, first identify the possible contract…

3. … and the relevant parties.

4. See what has gone wrong; work out some way that this can be framed as a breach of contract (more likely, a number of breaches).

Use terms of contract Express terms or implied terms if you need to (e.g. implied because of statute law, e.g. Sale of Goods Act, or implied as a matter of fact - officious bystander test).

5. Think about whether it is a negligently caused breach or not (doesn't matter as far as breach of contract is concerned, but might affect impact of an exclusion clause.)

6. OK, now you have a situation where one party (the claimant) can sue another (the defendant) for breach of contract. ⇒ this is when exclusion clause becomes important, because its aim is a defence to a claim (excluded liability for this situation). ⇒ see if breach is covered by an exclusion clause.

Exclusion clause cause limit liability or exclude it altogether (both are exclusion clause

Now we see whether the defendant has successfully managed to limit or exclude their liability for the particular breach.

7. This means using the 'checklist for exclusion clauses' - in other words, the three hurdles for an exclusion clause to be valid.

8. Firstly, is it actually incorporated into the contract?

Incorporation can be by one of the following three modes:

➢ signature,

➢ notice - reasonably brought to the attention at or before the contract concluded or

➢ by consistent course of dealing ⇒ include where it is usual in a particular trade or business (when it is the norm!)

9. Secondly, construction - on its wording, does it cover the breach?

Look closely at what the breach actually is and what liability has actually...