Control of exemption clauses flashcards

Question 1

What are the three stages of controlling an exemption clause?

Accepted Answer

**1. Incorporation** (is the clause part of the contract?) → **2. Construction** (does its wording cover the breach?) → **3. Statute** (is it rendered ineffective by UCTA 1977 or CRA 2015?).

Question 2

How can an exemption clause be incorporated into a contract?

Accepted Answer

1. By **signature** (*L'Estrange v Graucob*). 2. By **reasonable notice** before or at the time of contracting (*Parker v South Eastern Railway*). 3. By a consistent and regular **course of dealing** (*Spurling v Bradshaw*).

Question 3

What is the 'contra proferentem' rule?

Accepted Answer

A rule of construction that states any ambiguity in an exemption clause will be interpreted strictly **against** the party seeking to rely on it (the 'proferens'). See *Houghton v Trafalgar Insurance*.

Question 4

What is the significance of *Thornton v Shoe Lane Parking*?

Accepted Answer

It established that notice of an exemption clause must be given **before or at the time** the contract is made. A clause on a ticket issued by a machine after the customer committed to entry was too late to be incorporated.

Question 5

What is the effect of UCTA 1977 s.2(1)?

Accepted Answer

In a business-to-business contract, any clause that attempts to exclude or restrict liability for **death or personal injury** resulting from negligence is **automatically void**.

Question 6

What is the key test for most exemption clauses under the Consumer Rights Act 2015?

Accepted Answer

The **'fairness test'** under s.62. A term is unfair if, contrary to the requirement of good faith, it causes a **significant imbalance** in the parties' rights and obligations to the detriment of the consumer.

Question 7

What is the fundamental difference in scope between UCTA 1977 and CRA 2015?

Accepted Answer

UCTA 1977 applies to **business-to-business (B2B)** contracts. The CRA 2015 applies to contracts between a **trader and a consumer (B2C)**.

Question 8

What is the significance of *Interfoto v Stiletto*?

Accepted Answer

It established the 'red hand rule': particularly **onerous or unusual** clauses require a greater degree of notice to be reasonably brought to the other party's attention and incorporated.

Question 9

What is the key case for the UCTA reasonableness test?

Accepted Answer

*George Mitchell v Finney Lock Seeds*, where a clause limiting liability for defective seed to its price (£192) was found unreasonable given the huge crop loss (£61,000).

Question 10

Who has the 'burden of proof' for the UCTA reasonableness test?

Accepted Answer

The party seeking to rely on the clause (the proferens) must prove that it was reasonable (s.11(5) UCTA 1977).

Question 11

What is the 'grey list' in CRA 2015 Schedule 2?

Accepted Answer

A non-exhaustive list of contract terms that may be regarded as unfair. If a term is on the list, the presumption is that it is unfair, but a court makes the final decision.

Question 12

What is the difference between an exclusion and a limitation clause?

Accepted Answer

An **exclusion clause** seeks to remove liability entirely for a specific event. A **limitation clause** accepts liability but caps the amount that can be claimed, e.g., to the contract price.

Question 13

Under CRA 2015, what is the status of a term excluding the implied term of 'satisfactory quality'?

Accepted Answer

It is not binding on the consumer. Section 31 of the CRA 2015 prevents traders from excluding or restricting liability for the key statutory rights regarding goods.