Lecture Notes: Contract Law - Exemption and Limitation Clauses

Introduction

• Discussed the importance of notice in contract law.
• Key case: "Olley v. Marlborough Court Ltd" - Notice must be given at time of contract formation.

Incorporation by Notice

• Notice must be given before or during contract formation.
• Exemption clauses can be included by course of dealing.
  • Consistency in past dealings is crucial, as emphasized in "Spurling Ltd. v. Bradshaw".
  • "McCutcheon v. David MacBrayne Ltd" - Inconsistent dealings cannot establish incorporation by course of dealing.

Consistency in Course of Dealing

• Consistent past dealings can imply acceptance of exemption clauses.
• "Hollier v. Rambler Motors Ltd" - Few transactions over long time are insufficient.

Exemption Clauses

• Requirements: Clear evidence of incorporation into a contract.
• Signature implies acceptance unless deception is involved.
• Reasonable notice should be given, especially if no signature is present.
• Course of dealing must be consistent over a reasonable period.

Construction/Interpretation of Exemption Clauses

• Court interprets wording to determine if it covers the breach.
• Courts are more lenient with limitation clauses than exclusion clauses.
  • Limitation clauses limit liability to a certain point.
  • Exclusion clauses attempt to absolve liability entirely.

Case References

• "Ailsa Craig Fishing Co. Ltd. v. Malvern Fishing Co. Ltd" - Courts less hostile to limitation clauses.

Contra Proferentem Rule

• Ambiguities in exemption clauses resolved against the party seeking reliance.
• "Houghton v. Trafalgar Insurance Co. Ltd" - Ambiguity in 'load' interpreted against insurers.

Exclusion of Liability for Negligence

• Exemption clauses must expressly mention negligence to cover it.
• "Canada Steamship Lines Ltd v. The King" - Three-stage test for exemption clauses covering negligence.

Doctrine of Fundamental Breach

• Historically used against exemption clauses for serious breaches.
• "Photo Production Ltd. v. Securicor Transport Ltd" - Overruled automatic disablement of clauses due to fundamental breach.
  • Emphasized contractual interpretation to determine intent.

Conclusion

• Interpretation of contracts is key in determining applicability of exemption clauses.
• Courts focus on intention of parties and consistency in dealings.

Q&A

• No questions were raised at the end of the lecture.

Note: This lecture emphasized the importance of understanding exemption clauses and the criteria for their enforceability within contract law, with significant reliance on case law to illustrate points.