• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Exclusion Clauses and the Unfair Contract Terms Act 1977 case question.

Extracts from this document...

Introduction

Zero Plc is a large company specialising in the sale and supply of office equipment. Heather is the owner of a small estate agency company called Cellsoon Ltd. In the past, Heather has purchased a number of items of office equipment for her company from Zero Plc. Zero Plc regularly sends copies of its promotional literature to Cellsoon Ltd detailing the range of products which it offers and the different purchase options provided. Zero Plc provides five different purchase options which vary in price depending upon the amount of after-sales service provided and the extent of the liability accepted by the company. The company's literature also states that "Full details of our terms and conditions can be obtained by written request to our Head Office". One day, Heather's office telephone switchboard broke down. Heather urgently needed a replacement and so telephoned Zero Plc. Heather orally agreed to purchase a suitable "low cost" office switchboard machine for Cellsoon Ltd with no after-sales service being provided by Zero Plc. A copy of the printed terms and conditions was subsequently delivered with the machine. Heather noticed a clause in these terms and conditions which stated: "The liability of the company for loss or damage howsoever caused shall be limited to the sum of �1,000. The benefit of this clause shall extend to the company's employees." Three weeks after taking delivery of the machine, it burst into flames, badly burning Heather's arm. ...read more.

Middle

This was too late for it to be incorporated into the contract, as the contract was already concluded when the order was confirmed. * Heather has purchased office equipment from Zero previously; she also receives their advertising literature, which states that Zero offer different levels of service and extent to their liability. The advertising also states that their terms and conditions are available by written request. Heather could have sought clarification of their trading terms during her previous dealings. We know Heather did make previous purchases, but we do not know if it was always the "low Cost" option or how often Heather has dealt with Zero. Assuming their previous transactions were always on the same terms and had been regular, the clause could be incorporated into the contract on the grounds of previous dealings. Stage Two -Construction It is necessary to look at the "words" used in the exclusion clause, and consider; how the courts may construe them in their natural everyday meaning, in comparison to any legal interpretation of the "words"? Generally any wording in a clause, which is ambiguous, would be under the Contra Proferentum rule, meaning it will be construed against the party that included the clause and is seeking to rely on it. The exclusion clause attempts to restrict liability "howsoever caused". This term is wide enough to include both strict liability and negligence. ...read more.

Conclusion

Zero is a large Plc and heather's business, Cellsoon Ltd, is a smaller business. It would be appropriate to expect a large company to have resources available to cover the liability or to insure itself against a liability. Cellsoon Ltd could have insured against damage to their property. Heather purchased a "low Cost" machine for her company which offered no after-sales services, the low cost option could be considered an inducement under Schedule 2 (b). Schedule 2 (c), examines if Heathers could reasonably have known of the terms existence through her previous dealings with Zero, this is similar to the common law test of notice via previous dealings. The Sale of Goods Act 1979, imposes a implied liability, for goods to be of satisfactory quality. Zero cannot limit their liability for goods which are unsafe; the goods heather bought were unsafe and defective, which caused the fire and consequential damage, Rodney was careless in performing his pre-delivery check, therefore the goods were shipped with a safety defect. Zero cannot therefore limit their liability for the consequences. CONCLUSION There is an overlap between the common law approach to exclusion clauses and the statutory provisions of UCTA 1977, but by following the three stage approach it is possible to advise Heather. Liability cannot be limited in respect of her injury; she will have a claim for this. Provided Zero cannot prove that notice by previous dealings was incorporated and reasonable, they will not be able to rely on the exclusion clause in respect of the damage to Heathers premises. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our University Degree Contract Law section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related University Degree Contract Law essays

  1. This executive summary deals with the Marilyn M. case.

    project is riskier. The second reason is that a round number aids in simplifying the calculation so focus can be given of proving a point. I chose 10% for cash flows without Marilyn because I wanted a figure higher then the risk free rate for both US and Canada and yet lower then 12%.

  2. Traders and the sales of Goods Act

    by the seller (unless so small it would not be a breach by virtue of the principle de minimis non curat lex) gives the buyer the right to reject the goods and to treat the contract as repudiated by the seller.

  1. Critically examine how the law on exclusion clauses in contracts has developed and the ...

    into a contract through a course of dealing rather than being explicitly stated within the contratc. In Spurling 15 it was held that an exclusion clause was valid because the parties had always done business in this way. A case which highlights the use of notice of exclusion clauses through

  2. Exclusion clauses case. The first step that will be taken for Wills claim ...

    The second step that should be taken is to work out what sort of damage occurred. Exclusion clauses have the tendency to be interpreted strictly. If any ambiguity is present, the courts usually interpret the provision against the party seeking to rely on the clause (the contra proferentem principle).3 Due

  1. Consideration - in the existence of a contract.

    The leading explanation of this comes from a Privy Council case Pau On v Lau Yiu Long [1979] 3 All ER 65 where Lord Scarman provides this summary. "An act done before the giving of a promise to make a payment or to confer some other benefit can sometimes be consideration for the promise.

  2. Contract Law Case Analysis. RTS Flexible Systems Ltd v MolkereiAlois Muller GmbH & ...

    How is this argument different from the one it presented to Mr Justice Clarke? RTS advanced the argument to the CoA that there simply was no contract concluded and that any entitlement they had to receive payment was on reasonable value of services.

  1. Contract Problem Question - Exclusion of Liability/ Exclusion clauses

    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

  2. Does the UCTA and UCTTR impede on the freedom of contract.

    The UCTA 1977 is based on the exclusion of clauses if not reasonable at the date in time, whereas the UCCTR 1999 excludes terms, which are observed to be not for the purpose of ?good faith?. The main purpose both acts were brought into force was to extend the law

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work