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Exclusion clause

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Introduction

EXCLUSION CLAUSE An exclusion / exemption clause is a clause which if incorporated in the contract will entitle the party seeking to rely on it to exclude or exempt all the liabilities arising from a breach of contract. (And a limitation clause only seeks to limit the liabilities arising from a breach of contract). In order for a party to rely on an exclusion clause he has to first show that clause was incorporated as a term of the contract. At common law an exclusion clause can be incorporated in two ways: by advance notice to the other party that the exclusion clause is to be a term of the contract, & by the signature of the party agreeing to be bound by the exclusion clause. A notice can be given in three ways: notice by display (Olley v. ...read more.

Middle

Once it is judged that the exclusion clause has been properly incorporated a further question arises as to the validity of the clause under the Unfair Contract Terms Act 1977 (hereinafter UCTA). The UCTA applies to contract terms & to notices which are non-contractual, & which purport to exclude or restrict liability in tort. It seeks to limit the circumstances in which terms notices restricting or limiting liability may apply, but it does not affect the basis of liability, nor does it apply to any other 'unfair' terms. The Act is concerned to protect primarily the person who deals as a consumer. Sec. 1(3) of UCTA provides that the Act applies where a party seeks to exclude his business liability. Sec.12 provides that a party "deals as consumer" if he neither makes the contract in the course of a business nor holds himself out as doing so. ...read more.

Conclusion

Reasonableness has therefore to be judged by reference to the time of contracting. In determining whether a clause is reasonable shall be had to the 'Guidelines' set out in Schedule 2 of the UCTA. These guidelines refer to such matters as the bargaining strength of the parties, & whether the customer had received an inducement to agree to he clause, or whether in accepting it, had an opportunity to enter into a similar contract without having to accept a similar term. In George Mitchell v. Finney Lock Seeds Ltd. It was indicated that the courts would also take into account the resources of the parties concerned & availability of insurance to the party seeking to rely on the clause. In Smith v. Eric S Bush it was suggested that in deciding whether an exclusion clause met the requirement of reasonableness the matters discussed above should always be taken into account. 666 Mehdi Afif Contract Law ...read more.

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