Exemption Clauses Law Essay Example
EXEMPTION CLAUSES
• An exemption clause is defined as: ‘a clause in a contract or a term in a notice which appears to exclude or restrict a liability or a legal duty which would otherwise arise’ (per Yates in 1982). Thus, an exemption clause in a contract is one that attempts to exclude or limit one party’s liability towards the other.
• ‘Exemption clauses are an important feature of modern contracts…’ (per Downes)
• An exemption clause can be of two kinds: A limitation clause: where a party tries to restrict liability. An exclusion clause: where a party tries to exclude liability.
• The general rule is that the parties are free to determine the terms of their own contract. A justified use of an exemption clause may arise in business, such as where a buyer of a product agrees to late delivery in exchange for a lower price, and the courts will not interfere with this. They will, however, be much less willing to enforce an exemption clause that has been imposed on a consumer without free negotiations. The courts and Parliament do not look favourably on exclusion clauses and have found various ways of limiting their effect.
• Just read: The law on this topic is found in the common law as modified by the Unfair Contracts Terms Act 1977 (UCTA). This statute made certain clauses completely ineffective, while others are allowed only if they are ‘reasonable’. The Unfair Terms in Consumer Contracts Regulations 1994 and 1999 also affect the validity of certain terms that are ‘unfair’ within the meaning of the Regulations. However, the cases before 1977 are still valid as they illustrate important principles of law. Moreover, not all exclusion clauses have been affected by the Act or regulations. Therefore, it is necessary to consider both common law and statutory laws on this topic.
• The courts use a three-stage process to decide if an exemption clause is valid. (A) Incorporation, (B) Construction, (C) Legislation. The first two are
• An exemption clause is defined as: ‘a clause in a contract or a term in a notice which appears to exclude or restrict a liability or a legal duty which would otherwise arise’ (per Yates in 1982). Thus, an exemption clause in a contract is one that attempts to exclude or limit one party’s liability towards the other.
• ‘Exemption clauses are an important feature of modern contracts…’ (per Downes)
• An exemption clause can be of two kinds: A limitation clause: where a party tries to restrict liability. An exclusion clause: where a party tries to exclude liability.
• The general rule is that the parties are free to determine the terms of their own contract. A justified use of an exemption clause may arise in business, such as where a buyer of a product agrees to late delivery in exchange for a lower price, and the courts will not interfere with this. They will, however, be much less willing to enforce an exemption clause that has been imposed on a consumer without free negotiations. The courts and Parliament do not look favourably on exclusion clauses and have found various ways of limiting their effect.
• Just read: The law on this topic is found in the common law as modified by the Unfair Contracts Terms Act 1977 (UCTA). This statute made certain clauses completely ineffective, while others are allowed only if they are ‘reasonable’. The Unfair Terms in Consumer Contracts Regulations 1994 and 1999 also affect the validity of certain terms that are ‘unfair’ within the meaning of the Regulations. However, the cases before 1977 are still valid as they illustrate important principles of law. Moreover, not all exclusion clauses have been affected by the Act or regulations. Therefore, it is necessary to consider both common law and statutory laws on this topic.
• The courts use a three-stage process to decide if an exemption clause is valid. (A) Incorporation, (B) Construction, (C) Legislation. The first two are