ABSTRACT
This chapter deals with the situations where parties attempt to exclude or limit their liability for breach of contract by including exclusion or exemption clauses in the contract. It is an area governed by both common law and statute. The statutory provisions were developed in the latter half of the twentieth century and tend to have a consumer focus. The common law rules were developed earlier to deal with imbalances in bargaining power between the parties. The common law is looked at fi rst, here, followed by the statutory rules:
■ Common law ■ Rule of incorporation. Was the clause part of the contract? Was appropriate
notice of it given to the other party? ■ Rule of construction. Does the wording of the clause make it clear that it
covers the breach that has occurred? ■ Statute
■ Unfair Contract Terms Act (UCTA) 1977. The statute makes some exclusion clauses void (for example, clauses which attempt to exclude liability for death or personal injury caused by negligence). Many other clauses are subject to a test of ‘reasonableness’. Case law on the Act has tended to allow businesses more freedom to exclude liability when contracting with each other than in contracts with consumers.
