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= “Exclusion Clauses Essay | Business”;
$description =”Business Essay – Some issues can be quickly dealt with. The Unfair Contract Terms Act 1977 essay below is a great example”;
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Essay Title: Exclusion Clauses
Polish Ltd. is a professional cleaning service for business premises. Polish Ltd was employed to clean Bling Jewellers Ltd, a business. The parties had done business once or twice before over a number of years. On each occasion when they had done business before, the parties had signed a comprehensive contract that included standard terms and conditions. This time however, Polish Ltd was taken on at very short notice and Bling Jewellers had signed Polish’s form that simply stated "business done subject to standard terms and conditions.". Unfortunately, Polish Ltd spilt soapy water over a display cabinet. The cleaner did not notice that some of the water had run into the display case, and had damaged some of Bling’s expensive jewellery. The chemicals also burned the hand of Bling’s boss, when he tried to clean it up. As a result, the boss had to take a week off work. Bling Jewellers immediately claimed the full value of the loss from Polish. But Polish Ltd pointed to their standard terms and conditions: "Polish Ltd. is not liable for any loss or personal injury howsoever caused". Bling is pressing for compensation from Polish Ltd, as they had not had a copy of terms and conditions with the current contract, although they had received a copy with their earlier contracts.
Consider whether this exclusion clause is likely to be valid in law. Give reasons for your answer making reference to the Unfair Contract Terms Act 1977 and case law where applicable.
Essay Answer on Exclusion Clauses
This question concerns that aspect of contract law relating to exclusion clauses.
The facts specify that property damage and personal injury has been caused as a consequence of the apparently negligent action of an employee of Polish Ltd. The claim made by Bling Jewellers is resisted by Polish Ltd, who seek to rely on the exclusion clause incorporated in their standard terms and conditions of business. The clause in question stipulates that: “Polish Ltd. is not liable for any loss or personal injury howsoever caused”. It is submitted that this purported attempt to exclude legal liability is highly vulnerable to challenge at law.
Exclusion clauses are in some circumstances permissible but the law takes a restrictive line on their incorporation in and implementation over contracts. Even clauses which are deemed to be incorporated and reasonable enough between the parties to survive, they will still be construed contra proferentem, which means that any doubt will be interpreted in the interests of the party against whom the clause is being enforced: see Alexander v Railway Executive [1951] .
Some issues can be quickly dealt with. The Unfair Contract Terms Act 1977 (hereafter the “1977 Act”) provides for an absolute ban on exemption clauses which purport to exclude liability for negligence which results in death or injury. This statutory prohibition is carried in sections 2 and 5 of the 1977 Act. Furthermore, the 1977 Act applies to business activity such as that at issue in this scenario. Therefore, we can advise that the chemical burn suffered by Bling’s “boss” qualifies as a personal injury, the liability for which cannot, by statute, be excluded under the contract, whatever the status of the exclusion clause. It is not necessary to consider whether the clause has been incorporated into the contract in this context, because even if it has it will be rendered unenforceable by the courts. It is thus submitted that compensation can be recovered from Polish Ltd for that loss.
The question of incorporation is however relevant in the context of the property damage excluded. In this case the facts specify that the parties had done business once or twice before over a number of years, and that on each occasion when they had done business before, the parties had signed a comprehensive contract that included standard terms and conditions. This time however, Polish Ltd was taken on at very short notice and Bling Jewellers had signed Polish’s form that simply stated "business done subject to standard terms and conditions."
It is debatable whether Polish Ltd have done enough to draw Bling’s attention to the exclusion clause given the above information. A similar case is Hollier v Rambler Motors [1972] , where the plaintiff had had his car repaired by a garage (the defendants) five times in five years and had signed a form containing a clause stating that ‘the company was not responsible for damage caused by fire to customer’s cars on the premises’ on each occasion. However, at the time in question the plaintiff was not required to sign such a form when leaving his car for repair. In the event, the plaintiff’s car was damaged by fire caused by the defendant’s negligence on this occasion. The defendants sought to rely on the exclusion clause, citing the history of past dealings, but the Court of Appeal held that the clause was ineffective and the plaintiff succeeded in pressing his claim. The previous dealings between the parties were not sufficiently clear or regular enough to infer incorporation or acceptance of the clause and thus exclude negligence.
On the facts before us it is unlikely that doing business “once or twice” over “a number of years” would be sufficient to infer knowledge and acceptance of any standard trading terms let alone a significant and contentious exclusion clause of this nature. Therefore, even if the form signed containing the note: “business done subject to standard terms and conditions”, was deemed to provide constructive notice of the existence of the other terms, these will not be incorporated because a knowledge of and familiarity with the terms necessary to sustain an inference of acceptance cannot be proved by such a weak course of dealings in the absence of a new written contact.
Even if it were deemed to be incorporated, which it probably will not be, it would still be necessary to establish that the clause in question met one further criterion. Exemption clauses relating to property damage will only be enforced in so far as they satisfy the requirement of reasonableness: see section 2(2) Unfair Contract Terms Act 1977. It should be noted that this question will again be restrictively interpreted in favour of the claimant: Smith v Bush [1990] .
Section 11(1) of the 1977 Act provides that the question of reasonableness should be addressed by considering the circumstances that affected the parties at the point in time at which the contract was made. In the context of this scenario it is submitted that Bling Jewellers Ltd was highly vulnerable to spillages of corrosive and otherwise harmful liquids given that their business is the retail of expensive items of jewellery, which is a product inevitably susceptible to damage. It therefore seems unlikely that it would be considered fair and reasonable to subject Bling to such a risk on the facts. An excellent case on the nature of “reasonableness” in the context of exclusion clauses is: George Mitchell v Finney Lock Seeds Ltd [1983] , where Denning’s purposive and restrictive construction of exemption clauses was confirmed by the House of Lords.
Advice
In summary, it is advised that the personal injury suffered is definitely claimable and that it should also be possible to recover damages for the property losses. The exclusion clause (unlawful in respect of the injury) will likely prove ineffective or at least inadequately incorporated in regard to any claim for the damaged jewellery.
Bibliography
Contract Law, McKendrick E., (2003) Palgrave Macmillan
Smith and Keenan’s Advanced Business Law, Keenan D, (2000) Longman
Business Law, Keenan, D. and Riches S., Seventh Ed, (2001) Longman
Outline of the Law of Contract, Treitel G.H., (2004) Lexis Law