EXEMPTION CLAUSES
Exemption clauses, commonly referred to as “exclusion clauses” or “disclaimers”, are statements intentionally created to limit one’s liability in a legal contract. They intend to exclude or restrict the rights of a party in an agreement for the benefit of the second party involved. Exemption clauses appear on numerous forms of agreement, from the small print on business contracts to the terms and conditions found on tickets and receipts. These statements must, of course, abide by common law.
For an exemption clause to be effective in the eyes of the court, it must have been brought to the attention of party entering the contract prior to the agreement being formed; either through being written on the contract itself or the party relying on the clause actually brings the clause to the other party’s attention. If this notice does not occur, the contract is not legally binding. In the case of Olley v Marlborough Court (1949) the claimant, when booked into the hotel, signed a contract with no exemption clauses. When the claimant went to her room, however, there was a notice claiming to exclude the hotel’s liability for lost or stolen items. The claimant’s fur coat was later stolen. The court held the notice was not legally binding as a contract was already made by the time the claimant had seen the notice, therefore cannot be considered legally apart of the contract signed. The courts, in many cases, find it difficult to find evidence of the notice being given. When cases such as these occur, the court must decide whether a reasonable person would consider the agreement to be part of the contract and knew they should read, or ask for evidence of it. This therefore means that in the cased of being sued, the party relying on the contract must take legal precautions to prove they terms they must prove they took reasonable steps to the terms to the notice of a reasonable person. In Thompson v London, Midland and Scotland Railway Co (1930) the claimant attempted to sue the company after being injured when stepping off a train. The court found her claim unsuccessful as the company took reasonable steps to ensure notice was given to warn passengers to watch their step when leaving the carriages and that the company was not responsible for any injury sustained if an accident occurred, since the notice was given through means of an exemption clause on the tickets and signs on the platforms. To help distinguish these claims, Acts such as the Unfair Contract Terms Act 1977 have been established. This particular Act is enforced to “makes certain exclusions or restrictions of no effect at all and subjects others to a test of reasonableness”. This, once again, refers to a reasonable person’s capacity. Exemption clauses can be considered fair as they, when they are legally effective, abide by both common law and the party entering the contract must have notice of the statement made in the clause in which a reasonable person would have noticed and understood. Through legal precedents and Acts, claims can be analysed and interpreted effectively. Cases mentioned: -Olley v Marlborough Court (1949) http://www.e-lawresources.co.uk/Olley-v-Marlborough-Court.php -Thompson v London, Midland and Scotland Railway Co (1930) http://www.e-lawresources.co.uk/Thompson-v-London%2C-Midland-and-Scotland-Railway-Co.php Acts mentioned: -Unfair Contract Terms Act 1977 http://www.consumer.vic.gov.au/library/publications/resources-and-education/research/unfair-contract-terms-a-discussion-paper-2004.pdf |