If the exclusion clause is properly incorporated into the contract it can even exempt a party for a breach of a fundamental term (Photo Production v. Securicor Transport Ltd). However, if there is any ambiguity in the clause then the contra proferentem rule suggests that the clause will be construed against the interests of the person seeking to rely on it.
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.
Sec.2 (1): Under s.2 (1) any clause attempting to exclude liability for death or personal injury caused by negligence will be ineffective.
Sec.2 (2): Under s.2 (2) any clause excluding liability for negligently caused loss or damage to property will be ineffective unless it satisfies the test of reasonableness (below).
Sec.3: Under s.3 any contractual liability cannot be excluded by means of an exclusion clause unless the clause satisfies the test of reasonableness.
Sec.6: This section deals with both business & non-business liability. Under this section liability for the breach of any implied term (i.e. breach of s.12 – 15 of the Sale of Goods Act 1979) cannot be excluded unless the clause satisfies the test of reasonableness.
The requirement of reasonableness laid down in s.11 (1) is that the exclusion clause shall have been fair & reasonable ‘having regard to the circumstances which were known, or ought reasonably to have been, known to or contemplation of the parties when the contract was made’. 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.
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Mehdi Afif
