Exclusion clauses case. The first step that will be taken for Wills claim of the ten-thousand pound personal injury that he had encountered would be to verify whether the exclusion clause is clearly incorporated into their contract. The case states that

1. If a clause contains language which expressly exempts the party relying on the clause from the consequences of the party’s own negligence then consequently they would be subject to the UCTA where effect must be given to the clause. This may be done using words synonymous for negligence. In the scenario, the Glee Camp has not clearly identified that their contract includes negligence liability and as a reasonable man, Will and the court may interpret the clause to have been ambiguous and so questionable and as a result the court may turn to the second and third rule.
2. The second rule states the words must be wide enough, in their ordinary meaning, to cover negligence on the part of the party relying on the exclusion clause. The Glee Camps terminology when using “...in no circumstances be responsible...” is wide enough to include negligence, so in turn weakens Wills claim.
3. The third rule claims that if the exclusion clause could cover some liability other than negligence the clause will generally be confined in its application to that alternative source of liability

Lord Morton set out in dealing with negligence liability the courts must regard it as inherently unlikely that one party will agree to allow the other contracting party to exclude liability for his own negligence. This being the case even if the clause can be construed as to cover negligently inflicted damage, here UCTA may be applied.

Is the Glee Camp liable for the ten thousand pounds personal injury claim by Will? Under the UTCCR r5, it is unfair if the regulation has not been individually negotiated, and causes a significant imbalance in the parties’ rights and obligations, at the detriment of the consumer. R8 restores balance in stating that unfair terms are not binding on the consumer. As in the case of Will, who was not involved in any negotiations this Under s2 (1) of the UCTA a ‘person cannot by reference to any contract term or to a notice given to persons generally or to particular persons exclude or restrict his liability for death or personal injury resulting from negligence’. In the scenario, the Glee Camp attempt to do this and under the UCTA would be accused of making a void exclusion clause and may be found liable. Also as a business, it is expected of the Glee Camp to take out Public Liability insurance to cover any awards of damages given to a member of the public because of an injury or damage to their property caused by the business, them not doing so also makes them negligent.

2. For the £1500 damage to his property

The courts must yet again establish whether the exclusion clause is shown to be properly incorporated into the contract. As in Wills claim for personal injury, notice of the exclusion clause must be given at or before the time of concluding the contract as well as the term needing to contain or be referred to in a contractual document which was not the case in neither the scenario or in Olley v Marlborough Court [1949] 1 KB 532; where the defendant sought to claim that a notice excluded their liability and was incorporated in the contract. The Court of Appeal found this void as even if incorporated in the contract, the term was not sufficiently clear to cover the defendant’s negligence as also in the scenario as the term was written in the prospectus. The term must be contained or referred to in a document which was intended to have contractual effect as in Chapleton v Barry UDC.

Likewise with the claim made in (a), negligence liability needs to be interpreted reading the clause, which is rather vague in the scenario. Using the Canada Steamship rule one would notice the language used in the clause, that the ‘...Glee Camp will in no circumstances be responsible for damage to the property of those attending the course...’ clearly stating the company’s exclusion of any damage to student’s property, but it doesn’t specify that this includes negligence as seen in the case of Shell Chemicals v P&O Roadtanks Ltd [1995] 1 Lloyd's Rep 297, 301.  Nonetheless, the second rule creates a slight imbalance due to the use of language in the clause being quite wide in saying ‘in no circumstances’. This can suggest negligence falls under this category and so yet again may weaken Wills claim, resorting to the UCTA for support. The third rule does not apply as negligence is the only questionable ambiguity.

The courts must first assess whether the regulations may apply under the UTCCR, ‘taking into account the nature of the goods or services for which the contract was concluded and by referring, at the time of conclusion of the contract, to all the circumstances attending the conclusion of the contract and to all the other terms of the contract or of another contract on which it is dependent’. After making such assessments the courts will assess whether the Glee Camps clause was fair under r5 to do this r11, the “reasonableness” test, will be carried out. Here it will be considered whether the term is a ‘...fair and reasonable one to be included having regard to the circumstances which were, or ought reasonably to have been, known to or in the contemplation of the parties when the contract was made’. The exclusion is likely to be found unfair and unreasonable so not binding on Will as the consumer. Under s2 (2) of the UCTA it states that ‘In the case of other loss or damage, a person cannot so exclude or restrict his liability for negligence except in so far as the term or notice satisfies the requirement of reasonableness’. This again prevents the clause from being valid as the clause attempts to dismiss liability of their negligence and their liability for the damages on Wills property, which is void under the UCTA.

3. To be reimbursed for the cost of the course

A fundamental breach is a  of an essential or basic  of a  by one , entitling the other party to treat the contract as having been terminated. Will may view that in his situation the Glee Camp had breached their contract with their inability to provide him with a good learning experience as their brochure was misrepresenting by their use of  positive statement of fact in saying “our focus is on you”, which is made or adopted into a contract and is untrue. In their use of language to explain their low prices it is misleading as it only makes clear that the low prices were because they don’t ‘waste [their] money on fancy facilities, equipment and props but keep things simple’; here it is not made clear that this would include low quality teaching.  The question however arises whether this serves as a good enough fundamental breach of contract. This depends on whether Will signed a contract which includes this misrepresentation. If these details were in the contract that Will signed for and this service was not provided then there is a breach of contract.  As in the case of Suisse Atlantique  Societe d’Armement Maritime SA v NV Rotterdamsche Kolen Centrale [1967 1 AC 361 where it was decided  that a contract can be voided if a breach of a fundamental term can be found. That is, a breach of a condition that "goes to the root of the contract", known as the Rule of Law doctrine.  Also at the Court of Appeal level in Photo Productions Ltd. v. Securicor Transport Ltd. [1978] 1 W.L.R. 856, Lord Denning championed the Rule of Law doctrine and extended the rule in Suisse Atlantique case to apply to all exemption clauses. However on appeal to the House of Lords Lord Wilberforce effectively overturned the Rule of Law doctrine and instead maintained a strict Rule of Construction approach whereby a fundamental breach is found only through examining the reasonable intentions of the parties at the time of the contract.

Is Will entitled to his reimbursement claim for the course? According to UCTA the scenario looks at s3 as it is not negligence, this section applies between contracting parties where one of them deals as consumer or on the other’s written standard terms of business. In the scenario Will is the consumer who is dealing on the Glee Camps written terms. Under this section it clearly states that the Glee Camp cannot exclude or restrict liability for their own breach of contract nor claim to be entitled to render a contractual performance substantially different to that reasonably expected of them. Neither claim to be entitled to render no performance at all.

To further answer the question the court must consider the relevant regulations under the UTCCR. Initially the court will assess whether Will is a Consumer using r3 (1) which describes a consumer as ‘any natural person who, in contracts covered by these Regulations, is acting for purposes which are outside his trade, business or profession’. One would argue Will to be a consumer however; it can also be argued he is not, as attending the Glee Camp he is acting for purposes to benefit his acting profession. The court will then turn to the other party, being the Glee Camp, and assess whether  they are a seller or supplier, which ‘means any natural or legal person who, in contracts covered by these Regulations, is acting for purposes relating to his trade, business or profession, whether publicly owned or privately owned’.  According to the definition the Glee Camp is a seller or supplier and so the terms are eligible to be discussed further. The courts would furthermore distinguish whether the term has been individually negotiated which in the scenario it has not. Following this the court will measure whether it is a core term and depending on this the court will be able to assess the fairness using r6 (2). The term in the scenario is not a core term so further steps must be taken. The court would firstly define an unfair term using r5 and take into account all circumstance thereafter using r6 - assessment of unfair terms. Schedule 2 will soon after be used to assess whether Will received an inducement to agree to the term, or in accepting it had an opportunity of entering into a similar contract with other persons, but without having to accept a similar term. If the term is judged by the courts to be unfair, r8 (1) regulates the term does not bind the consumer.

As a result, it is likely that Will will have a claim for both (a) and (b) due to the clause not being incorporated into the contract. However from the findings found earlier the contract is not a valid contract so Will may not have a claim. However it all depends on how the court interprets the clause and their judgement as to whether the clause is incorporated, their interpretation and their reference to the UCTA and UTCCR.  

Bibliography

Table of cases

Chapelton V Barry UDC (1940) 1 KB 532

Canada Steamship Lines v The King (1952) AC 192

Olley v Marlborough Court [1949] 1 KB 532

Chapleton v Barry UDC (1940) 1 KB 532

Shell Chemicals v P&O Roadtanks Ltd [1995] 1 Lloyd's Rep 297, 301

Suisse Atlantique  Societe d’Armement Maritime SA v NV Rotterdamsche Kolen Centrale [1967 1 AC 361

Table of legislation

Unfair Terms in Consumer Contracts Regulations Act 1999(UTCCR)

Unfair Contract Terms Act 1977

Books 

Furmston Michael, ‘The Contents Of The Contract’,  Oxford University Press, Cheshire, Fifoot & Farmston’s Law Of Contract (Fifteenth Edition, Oxford university Press, 2007) pg204

Websites

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Susan Wortzman & Christine Snow, ‘Limiting Liability under Warranty: Interpreting Exclusion Clauses’, (online commentaries as specialist Legal Newsletters 2007), < http://www.internationallawoffice.com/newsletters/detail.aspx?g=8d3d08e8-bb74-40ca-851e-4088de833f9d>,  Accessed 8 March 2011

The National Archives, ‘Unfair Contract Terms Act’, (government legislation 1977), <http://www.legislation.gov.uk/ukpga/1977/50>, Accessed 9 March 2011

The National Archives, ‘The Unfair Terms in Consumers Contracts Regulations Act 1999’, (government legislation 1977), < http://www.legislation.gov.uk/ukpga/1977/50>, Accessed 9 March 2011

The National Archives, ‘Unfair Contract Terms Act’, (government legislation 1977), < http://www.legislation.gov.uk/ukpga/1977/50>, Accessed 9 March 2011

--, ‘Fundamental breach’, (law glossary), <http://www.law-glossary.com/definition/fundamental-breach.html>, accessed 11 March 2011

--, ‘Duhaime.org’, (law & legal information), <http://www.duhaime.org/LegalDictionary/M/Misrepresentation.aspx>, accessed 11 March 2011

--, ‘Fundamental breach’, (an Outline Bank), <http://www.4lawschool.com/contracts101/fundamental.htm>, accessed 11 March 2011

The National Archives, ‘The Unfair Terms in Consumers Contracts Regulations Act 1999’, (government legislation 1977), < http://www.legislation.gov.uk/uksi/1999/2083/regulation/3/made>, Accessed 11 March 2011

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