Exclusion Clauses. There are many elements to consider when attempting linking an exclusion clause with a contract. There are certain rules and regulations that even contracts themselves must abide by.

Contract Law 36060

Quantar Ltd does not accept liability for any damage caused to property left unattended at any time during game play. Quantar Ltd also does not accept liability for any items lost or misplaced at any time during game play. Individuals must take reasonable care to protect personal items and any items left unattended will be done so at the owner’s risk. Quantar Ltd staff will not accept responsibility for damage to, or loss of items, even if it is left in their care.

In this clause, game play amounts to any time spent on the premises, regardless of whether individuals participate in activities or not. Personal items refer to any item belonging to the party in question, or any person related or associated to the party in question. Please note that the contract is formed at the venue’s arrival lounge and not online or via telephone. These terms and conditions and subject to English law.

There are many elements to consider when attempting linking an exclusion clause with a contract. There are certain rules and regulations that even contracts themselves must abide by.

The first and foremost element to be considered is the incorporation of the clause into the contract itself. It is crucial that clauses are in liaison with the rules regarding incorporation for if they not, the clause will be held as unsatisfactory and therefore invalid. There are three ways of incorporating a clause into a contract, which will now be explored. Firstly, a clause can be incorporated by the other party’s signature. This is a very common technique and is most effective as it is almost impossible for one to agree to the terms of an exemption clause without having read it first. This was derived from the case of L’Estrange v Gracoub where it was held that the suppliers were not held liable for the malfunctioning of a machine they supplied because the claimant had signed the contract, which clearly dismissed their responsibility. It is a legal principle that once a contract is signed, it comes into effect regardless of whether or not it had been read prior to its signing. However, this principle does not apply where any misrepresentation or deception is presented.

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The second technique of properly incorporating a clause into a clause is by notice. Again this is commonly used and is also highly efficient, provided the necessary terms are followed. Speaking on necessary terms, there are three requirements that must be satisfied in order for the notice to be held acceptable. The first factor is the time of notice. It is held that for an exemption clause to be successfully incorporated into a contract the notice must be given before or at the time of the contract being formed—Olley v Marlborough Court Ltd. Secondly, the form in which the notice is made ought to be reasonable enough that a reasonable man would expect to find contractual terms in that given form. This was established in the Chapleton v Barry, where the terms were written in small print at the back of the receipt. This was not held reasonable enough to hold contractual terms—a document will only be considered as contractual if the party to whom it is given knows the intended effect. Finally, the reasonableness of notice must be determined. This does not so much as mean the reasonableness of the form of the notice, but the reasonableness of the actual terms contained in the notice. In the case of Interfoto v Stilleto, the decision was made that the defendant was not contractually bound to pay a charge in breach of contract as the terms in the contract were held to be ‘very onerous’ and was not made clear enough. This led to Lord Denning’s quote, stating that:

“Some clauses…need to be printed in red ink…with a red hand pointing to it before the notice could be considered sufficient.”

The more onerous the term, the greater the level of the notice ought to be in order to incorporate it.

Finally, the third way a clause can be incorporated into a contract, is by a course of previous dealings. It is quite fair to say that a party who has contractually dealt with another either consistently or on a regular basis ought to be familiar enough with terms of the contract without having to be reminded each and every time. In Spurling v Bradshaw, the clause was automatically interpreted into the contract via course of previous dealings. However, previous course of dealing is not always satisfactory to include certain clauses, as seen in the case of Hollier v Rambler Motors.

Finch, Radley & Co. highly advises that an appropriate way to incorpoprate such a limitation clause is to have reasonable notices surrounding the premises stating its disclaiming of liability.

Once it has been established that the clause has been incorporated in the correct manner, the strict rules laid down by the courts will then narrowly construe the meaning of the clause. A clause that is found contra proferentem is a clause that is held ambiguous or too vague, and will therefore be interpreted in the way that is least favourable to the contractor. Trafalgar Insurance Co. was the first to be subject to this rule and were scrutinised for their ambiguous definition of the term ‘load’. Contra proferentem is especially strict on clauses that attempt to exclude liability for negligence and holds that words must be extremely clear in referring to negligence in order for consideration of successful exemption from liability in negligence. The contra proferentem rule, through the case of Suisse Atlantic, allows exemption of liability through fundamental breach, as long as it was also subject to the question of the means of the interpretation of that clause. This contra proferentem rule however, is less strict on limitation clauses as they are usually not as harsh as exemption clauses.

In order to avoid being subject to scrutiny of the CP rule, the exclusion clause for Quantar Ltd has been constructed in such manner that no broad or amibiguous terms are used. Also for this reason, terms which may be deemed unclear are further defined as part of the clause.

Like all clauses incorporated in a contract, Quantar’s limitation clause must comply with the Unfair Contract Terms Act 1977. This Act aims to detail further limitations of exclusion clauses as well as providing specific regulations in which each exemption clause must comply. It is also designed to protect consumers from unfair clauses.

The UCTA is very strict on exclusion clauses that purport to exclude liability for negligence, and limits these clauses severely. S.2(2) of the UCTA holds that: any clause excluding liability for negligence which causes loss or damage is subject to a reasonable test. Should the exclusion clause for Quantar Ltd be subject to scrutiny under the UCTA for any reason, it will not immediately be declared void but will undertake a reasonable test in order to determine the validity of the clause.

This reasonable test is defined in s.11 of the UCTA 1977 and states that the clause must be made:

fair and reasonable
in the circumstances
depending on the knowledge of the parties
at the time of the contract

The clause for Quantar Ltd has been structured in such a way that it complies with this reasonable test and should therefore not be subject to any difficulties, should the test be applied.

It should be noted that the recent Unfair Terms in Consumer Contract Regulations Act 1999 overlaps the UCTA in certain areas. This applies to ‘consumer standard form contracts’ but excludes core terms, which are usually subject to the matter of price. This means that the Quantar Ltd’s standard form contract now ought to comply with the UTCCR 1999. Subsequently, any part of the contract that is deemed as unfair to a consumer will be scrutinised by the UTCCR 1997. The UTCCR defines a consumer as a ‘natural person’ acting outside the trade or business. Reg.5(1) defines ‘unfair’ as:

anything contrary to good faith
causing significant imbalance between parties
causing detriment to the consumer.

As long as Quantar Ltd complies with these regulations throughout each contractual dealing, no problem ought to arise amongst either the UCTA or the UTCCR and the exemption clause will be deemed fair and valid.

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