1 sought to exclude liability “for articles

1 Olley
v Marlborough Court Ltd 1948 1 KB 532 1949 1

Chapelton v Barry Urban District Council 1940 1 KB 532 1940

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The document including the
exclusion clause must be a contractual document and not just a mere
acknowledgement of payment or a receipt. In Chapelton v Barry Urban District Council,
a key example of this, the exclusion clause was on the back of a receipt given
to Mr Chapelton after acceptance had already taken place therefore this term
could not be incorporated as a contract already existed and a new term could
not be introduced2.
The document signed by both Petty Productions and Northern was intended to be a
contractual one and was aware that all terms to be followed would be included
in said document. Similarly, to the point previously mentioned, the exclusion
clause must be an integral part of the contract. In Thornton v Shoe Lane
Parking the exclusion clause was on a

An exclusion clause can be
included as an express term in a written contract, Petty Productions have
included the exclusion clause. For an exclusion clause to be properly
incorporated and binding, it must be included at the time the contract was
made. In Olley v Marlborough Court Ltd, a hotel sought to exclude liability
“for articles lost or stolen”1
however they did not mention this clause at the reception desk when the
contract was being made therefore it was ineffective and did not form part of
the contract. In this scenario the exclusion clause is in writing so is a
fundamental part of the contract made. It is normal for an exclusion clause to
seek to restrict the seller’s liability for breach of contract, this is exactly
the case for Petty Productions, so the clause is fair and just.

notice displayed in the car
park in the small print. To Lord Denning the clause was that wide that he said,
“in order to give sufficient notice, it would need to be printed in red ink
with a red hand pointing to it – or something equally startling”1.

When a document has be
signed it is difficult to argue that a clause has not been incorporated as it
is a written contract signed by the party who it is being enforced against.
“When a document containing contractual terms is signed then in the absence of
fraud or, I will add, misrepresentation, the party signing it is bound and it
is wholly immaterial whether he has read the document or not”2.
Isra signed the contract, in doing so she is bound by all the terms stated in
the document and this is irrespective to whether she read the full document or

Northern, therefore, cannot
avoid the exclusion clause included by Petty Productions as it was properly

Northern and Gilmour

An exclusion clause can be
included as an express term in the standard terms and conditions of a sale.
Northern offered an order form which laid out the terms and conditions they
wish to apply when ordering from Gilmour. In Parker v South Eastern Railway Co3,
it is said an individual cannot escape a contractual term by failing to read
the contract but that a party wanting to rely on an exclusion clause must take
reasonable steps to bring it to the attention of the customer.

In Butler Machine Tool v
Ex-Cell-O Corporation, Butler was the seller and Ex-Cell-O was the buyer.
Butler sent over a quotation containing their own terms and conditions which
included a price variation clause. Ex-Cell-O responded by putting in an order
but also changing the terms and conditions so that theirs would apply. The
offer put forward by Butler to sell the machine was destroyed by the counter offer
made by Ex-Cell-O therefore the price variation clause was not part of the

“When there is a ‘battle of
forms’, there is a contract as soon as the last of the forms is sent and
received without objection being taken to it…In some cases the battle is won by
the man who fires the last shot. He is the man who puts forward the latest
terms and conditions: and, if they are not objected to by the other party, he
may be taken to have agreed to them”5.

The facts set out in Tekdata
Interconnections Ltd v Amphenol Ltd6
case is very similar to the facts in this Northern and Gilmour case. Tekdata
had placed purchase orders with Amphenol which stated that the purchase was to
be on Tekdata’s terms and conditions. Amphenol had then sent acknowledgements
of the orders but stated the purchase was to be on their terms and conditions
instead. The parties had then proceeded with the supply and purchase of the
goods. In this scenario Northern is the buyer and Gilmour are the seller.
Northern exactly like Tekdata orders from Gilmour using an order form which
states the terms and conditions used by Northern. Gilmour send back an
acknowledgement form stating their own terms and conditions which includes an
exclusion clause.

Therefore, as in Tekdata,
the courts take the traditional view that if no further communication is passed
between the parties after Amphenol’s acknowledgement the last party to make
that statement will generally succeed. To depart from that conclusion, both
parties would need to show that they intended other terms to prevail, either
because it was expressly agreed or inferred under the circumstances. This means
if Northern continue with the purchase they will be subject to Gilmour’s terms
and conditions and the exclusion clause Gilmour has included.

QUESTION 2 all Unfair Contract Terms Act 19777

In this scenario I will be considering
the Unfair Contracts Terms Act 1977 which applies to clauses which seek to
restrict or exclude a business liability. S1(3) states a business liability is
a “liability for breach of obligations or duties arising from things done or to
be done by a person in the course of a business … or from occupation of
premises used for the business purposes of the occupier”.

The first clause in
Northern’s contract states the company is not liable for any death or personal
injury resulting from negligence. S2(1) “a person cannot by reference to any
contract term or to a notice givens to persons generally or to particular
persons exclude or restrict his liability for death or personal injury
resulting from negligence”. This term is not enforceable, and it is unfair.

The second clause states all
implied terms relating to title are excluded, under S6(1) a) section 12 of the
Sale of Goods Act 1979 (seller’s implied undertakings as title, etc.) b) Section
8 of the Supply of Goods (Implied Terms) Act 1973 (the corresponding thing in
relation to hire – purchase), cannot be excluded or restricted by reference to
any contract term. A warranty provides assurance between both parties that
specific facts or conditions are true. This is explored in L’Estrange “any
express or implied condition, statement or warranty… is hereby excluded”8.
When the machine did not work, the claimant sought to claim but could not as
she had signed the order form, so the defendant was protected by the clause. In
comparison in Wallis, the contract set out that they “give no warranty
expressed or implied”9
as to the description of the product which ultimately did not match the
description given. It was held that the clause only applied to the warranty and
the appellants were entitled to remedies. Due to excluding the terms relating
to the title this clause is unfair.

The third clause states all
implied terms relating to quantity are excluded under S6(1A) liability for breach
of the obligations arising from –  a) Section
13, 14 or 15 of the 1979 Act and b) Section 9, 10 or 11 of the 1973 Act cannot
be excluded or restricted by reference to a contract term in so far as the term
satisfies the requirement of reasonableness. The ‘reasonable’ test is set out
in S11 whether a term satisfies the requirement of reasonableness, to a matter
specified in Schedule 2 to the Act. A term which purports to exclude or
restrict any relevant liability is not a term of the contract. In R & B
Customs Brokers10,
the claimant purchased a car which turned out to be in poor condition which
violates S14(3) of the Sale of Goods Act 1979 on the fitness of the purpose.
The defendant included an exemption clause in the contract which sought to
exclude liability under this. The claimant cited S6, of the Unfair Contract
Terms Act 1977, which stipulates that the Sales of Goods Act 1979 cannot be
excluded by any contractual term. However, in Northern’s case, the claimant
would be a company rather than a consumer, so S12(1A) of the Unfair Contract
Terms Act 1977 applies and therefore the exclusion clause is enforceable.

The fourth clause said
defective goods must be reported within 7 days otherwise liability is
discharged. S7(1A) of the Unfair Contract Terms Act 1977 states “liability in
respects of goods, correspondence with description or sample, or their quality
or fitness for any particular purpose, cannot be excluded or restricted by
reference to such a term except in so far as the term satisfies the requirement
of reasonableness”. George Mitchell Ltd states in the contract that if the
product sold “did not comply with the express terms of the contract or proved
defective … the defendant was limited to their replacement or to refund of the
price paid”11.
Although the conditions did limit the liability under the contract, reliance on
such conditions would not be reasonable within the meaning of the Sale of Goods
Act 1979 S55. The exclusion clause, in this scenario therefore, is enforceable
until it becomes unreasonable to do so.

The fifth clause states that
in respect to the goods supplied, the liability of the company is limited to
actual cost of replacement of any defective goods. Under the Unfair Contract
Terms Act 1977 S2(2) “in the case of often loss or damage, a person cannot so
exclude or restrict his liability for negligence in so far as the term or
notice satisfies the requirement of reasonableness”. Curtis v Chemical Cleaning
and Dyeing Co contained a clause excluding liability “for any damage howsoever
but when explaining the clause to the claimant they only mentioned certain
aspects of what was excluded and did not explain that all damage caused was
excluded. This meant that the defendant could not rely on the exclusion clause
as its scope had been misrepresented. The exclusion clause in this scenario is
set out and contains how they plan to limit their liability and so this term is

The final term in this
exclusion clause states that they won’t be liable for any economic or
consequential loss or damage howsoever arising including without the prejudice
to the generality of the foregoing loss of profit and loss of business. Hadley
v Baxendale states that the defendant could only be held liable for losses, caused
by the breach, that were foreseeable. Croudace Construction Ltd v Cawoods
Concrete Products Ltd, damages would be recoverable if it could reasonably have
been in the party’s contemplation at the formation of the contract. Victoria
Laundry Ltd v Newman Industries Ltd, same as case above but, it states that the
damages although recoverable the amount was under scrutiny. It was reasonable
to expect loss of profit, but the claimant could not recover for the loss of
the exceptionally lucrative amount since the defendant was unaware the amount
would be that high. McCain Foods Ltd v Eco – Tec Ltd (Europe), court held the
supplier could not rely on a clause in the contract excluding liability for
indirect and consequential losses and established that if the term is too vague
then the clause can not be enforceable. In Northern’s case the exclusion clause
would not be enforceable as its too vague and it would be foreseeable that a
breach of the contract would cause economic loss.

In conclusion the overall exclusion clause is not
enforceable as some of the terms are unfair and therefore the whole document
cannot be enforceable.

v Shoe Lane Parking 1970 2 QB 163 1971 32

2 L’Estrange v F Graucob Ltd 1934 2 KB 394 1934 25

Parker v The South-Eastern Railway Company 1877 2 CPD 416 1877

Machine Tool Co v Ex-Cell-O Corporation Ltd 1977 case analysis

Butler Machine Tool Co v Ex-Cell-O Corporation Ltd 1977 1 WLR 401 1979 29

Tekdata Interconnections Ltd v Amphenol Ltd 2009 EWCA Civ 1209 2009

7 Unfair Contract Terms
Act 1977 c. 50

v F Graucob Ltd 1934 2 KB 394 1934 …

Wallis, Son & Wells v Pratt & Haynes 1911 AC 394 1911 1

Customs Brokers Co Ltd v United Dominions Trust Ltd 1987

George Mitchell (Chesterhall) Ltd v Finney Lock Seeds Ltd 1983 2 AC 803
1983 2

Curtis v Chemical Cleaning and Dyeing Co 1951 1 KB 805 1951 1


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