Exclusion Clause
Introduction
Joe (“J”) is demanding compensation from Fred (“F”) for the damage caused by Fred’s paints. F is attempting to exempt himself from the liability by the exclusion clause written on the receipt and the sign. The effectiveness of the exclusion clauses depends on several factors. Firstly, whether the exclusion clause belongs to a term of contract will be determined. Secondly, reasonable steps leading to the notice of exclusion clause to J will be decided. Thirdly, the words of exclusion clause will be carefully analyzed. Finally, the result as to the exclusion clause will be carefully suggested as well as other possible results if a different situation happened.
The contractual effectiveness of exemption clauses
Signed or Unsigned document
In order to identify the contractual effectiveness of the exclusion clause, the court needs to verify where the exclusion clause is contained. Where the exclusion clause is contained in a signed contractual document, the person is bound by the clause no matter the person really read the terms or not[1], showing in the case L’Estrange v Graucob (F) Ltd. It is reasonable to expect that a person being aware of all the contractual terms in which the signed document contains. The only exception is that the signatory can prove fraud or misrepresentation in regard to the clause.[2] If the exclusion clause is contained in an unsigned document, such as receipt and voucher, the court will first determine whether the document is contractual in nature and then determine whether reasonable notice of exclusion clause was given to the party being subject to the clause.
In this case, the exclusion clause is written on the receipt and a small sign on the counter of F’s sales area. Compared with formal signed contract, terms on the receipt are quite vague. The question depends on whether a reasonable would regard the term be part of the contract.[3] Obviously, in this case, the receipt was enclosed by J as proof of purchase since
Joe (“J”) is demanding compensation from Fred (“F”) for the damage caused by Fred’s paints. F is attempting to exempt himself from the liability by the exclusion clause written on the receipt and the sign. The effectiveness of the exclusion clauses depends on several factors. Firstly, whether the exclusion clause belongs to a term of contract will be determined. Secondly, reasonable steps leading to the notice of exclusion clause to J will be decided. Thirdly, the words of exclusion clause will be carefully analyzed. Finally, the result as to the exclusion clause will be carefully suggested as well as other possible results if a different situation happened.
The contractual effectiveness of exemption clauses
Signed or Unsigned document
In order to identify the contractual effectiveness of the exclusion clause, the court needs to verify where the exclusion clause is contained. Where the exclusion clause is contained in a signed contractual document, the person is bound by the clause no matter the person really read the terms or not[1], showing in the case L’Estrange v Graucob (F) Ltd. It is reasonable to expect that a person being aware of all the contractual terms in which the signed document contains. The only exception is that the signatory can prove fraud or misrepresentation in regard to the clause.[2] If the exclusion clause is contained in an unsigned document, such as receipt and voucher, the court will first determine whether the document is contractual in nature and then determine whether reasonable notice of exclusion clause was given to the party being subject to the clause.
In this case, the exclusion clause is written on the receipt and a small sign on the counter of F’s sales area. Compared with formal signed contract, terms on the receipt are quite vague. The question depends on whether a reasonable would regard the term be part of the contract.[3] Obviously, in this case, the receipt was enclosed by J as proof of purchase since
Bibliography: 1. Andrew Terry & Des Guigni. Business & The Law, 4th Edition, 2005 [315-322] 2 3. J W Carter & D J Harland. Contract Law in Australia, 4th Edition, 2002 [273-274] 4 17. Butt v McDonald (1896) 7 QLJ 68 ----------------------- [36] See eg Butt v McDonald (1896) 7 QLJ 68