Contract Problem Question - Exclusion of Liability/ Exclusion clauses

by cecilyleung (student)

University Degree Law

Issues
There are a few issues to be looked at for the case. They are:-

Whether the term includes the reservation of right to alter the frequency of laundry collection?

Whether the exclusion clause excludes liability arise from the change in frequency of laundry collection?

Whether Etienne can claim damages caused by the delayed return of laundry?
Whether Etienne can claim damages for his wife’s development of rash?
Whether the injury that the Ultraclean van driver caused Etienne negligently was part of the contract?

Area of Law
The area of law is:
Exclusion of Liability/ Exclusion clause
Unfair Contract Terms Act 1977 (hereinafter known as UCTA); and Unfair Terms in Consumer Contracts Regulations 1999 (hereinafter known as UTCCR);
Application

Pick up times

An exclusion clause is a term of the contract which attempts to exclude or restrict one’s liability which he would otherwise owe to the other. In the event of any ambiguity in the wording of any exclusion clause, the benefit of that doubt will be given to the claimant (contra proferentem rule). In Houghton v Trafalgar, the court held that the term could have a narrower interpretation and thereby the claimant was successful. The term offered by Ultraclean states ‘Ultraclean reserves the right to alter pick up times without notice’. This may be interpreted as collecting the laundry on different days or hours during the week. It is rather unclear whether this means Ultraclean reserves the right to alter the frequency of collecting laundry from customers. Such ambiguity therefore, according to the contra proferentem rule, the terms do not include the reservation of rights to alter the frequency of laundry collection. It is likely that Etienne can claim for damages, if any, has occurred by the unilateral change of pick up times.

However, it is likely that Ultraclean may argue that the terms included an exclusion clause that they ‘accept no liability’ for damages ‘howsoever caused by Ultraclean, its agents and employees’. In Olley v Marlborough Court Hotel, the court held the clause had not been incorporated into the contract, as it was on a notice on a wall inside the hotel and therefore when the contract was formed the claimant was unaware of the clause. Such exclusion clause made by Ultraclean was printed on the collection slip; in other words, Etienne was unaware of the clause when the contract was formed. Hence he can claim damages, if any, for which caused by the change in frequency of laundry collection.

Late return of laundry

The next issue is the late return of laundry. Ultraclean guarantee that they would return the laundry within three days, but for two weeks none of Etienne’s laundry is returned. In Photo Production Ltd v Securicor Transport Ltd, the court applied the doctrine of fundamental breach, reasoning that the breach was so serious that it effectively breached the whole contract and thus the exclusion clause did not apply. The 3 days return guarantee is part of the contract. Although there had been an exclusion clause, for around half month Ultraclean did not return the laundry ...

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Late return of laundry

In addition, under UCTA s5 (1) (b) where loss or damage results from the negligence of a person concerned in the manufacture…of the goods, liability for such losses or damages cannot be excluded by reference to a guarantee of goods. Therefore, as the three-day-return policy was a guarantee, Ultraclean is liable for the losses or damages arise from the delay.

Moreover, under UTCCR Paragraph 1(p) states that terms ‘giving the seller the possibility of transferring his…obligations under the contract…to reduce the guarantees for the consumer, without the latter’s agreement’ may be regarded as unfair. In other words, it may be argued that it is unfair to have guaranteed a certain things but fail to fulfill and thereafter avoid the liability with exclusion clause. In such circumstances, Etienne can claim damages that could have been avoided if Ultraclean returned the laundry within 3 days, because this is what they guaranteed. Above all, it may be argued in a similar manner with the Marlborough Court Hotel case, where the court held the exclusion clause was not incorporated into the contract at all, because the claimant has no knowledge of the existence of the clause when entering the contract.

Personal Injury

It is likely that Ultraclean may argue that, with the exclusion clause they accept no liability or that their responsibility is transferred to a third party (the cheap soap producer), for the injury of rash Etienne’s wife has developed. According to UTCCR, such exclusion clause which also excludes or limits the legal liability of the seller in the event of the death or personal injury of a consumer may be regarded as unfair. The fact they also undertake, in other words, guaranteed to use ‘biologically sound, hypo-allergenic soaps’, on one level, they are in breached of the contract; on another level, they are also in breached of the UTCCR.

Negligent driving of van driver

Under the presumption of the role of the Ultraclean van driver was to return the laundry to Etienne. UCTA s5 (1)(b) states where loss or damage results from the negligence of a person concerned in the distribution…of the goods, liability for such losses or damages cannot be excluded by reference to a guarantee of goods. The actions of the driver were part of the distribution of goods, and therefore Etienne’s injury caused his negligence can be claimed under the protection of UCTA.

4.0 Conclusion

In conclusion, Etienne has a high chance to claim damages as it is likely that the clause are invalidated due to the method of incorporation and rules of construction. Ultraclean strongest ground for defence in the case is that with the same terms and conditions on the back of each collection slip for the first month while everything works well. However this argument would not stand, UCTTR applies on personal injuries and therefore Etienne can claim damages on his wife’s rash. Moreover, it is definite that Etienne can claim damages on his injury caused by the careless Ultraclean van driver during the course of delivery, which is covered under UCTA.

[1953] 2 All ER 1409

[1949] 1 KB 532

[1980] AC 827

Schedule 2 Reg 5(5) Para 1(a)