An exclusion clause is any clause in a contract that aims to reduce or eliminate the liability of one party in the event of a breach of contract. In order to successfully have such a clause upheld in court it must pass three tests, or ‘layers’.
(a) Exclusion clauses must be clearly incorporated into a contract before it is agreed by both parties for example in Olley v Marlborough Court. Where a contract has been signed it is generally deemed that both parties are bound by what they sign per L’Estrange v Graucob.
However where an onerous term is present in the contract this must be highlighted before agreement per Chapleton v Barry.
Terms may be implied into a contract through the ordinary course of dealings per Spurling v Bradshaw, though the courts will need to be satisfied that a sufficient number of transactions have happened over a number of years per Hollier v Rambler Motors. |
