ABSTRACT
If a party seeks to rely on a clause in a contract which purports to exclude (or merely to financially limit) the party’s liability for breach of contract, misrepresentation or negligence then that party must show that the clause is a valid part of the contract and that it covers the contingent liability which is sought to be excluded. Even if the party is able to show that the clause has been incorporated in the contract, and that on the clause’s true construction it covers the breach which has occurred, they may still find that the clause is invalid or inoperative.
A person who signs a document, purporting to have contractual effect which contains an exclusion clause, is bound by its terms. It does not matter whether that person has read the terms or not, they are still bound. In L’Estrange v Graucob (1934), the female owner of a café purchased an automatic cigarette vending machine. She signed the agreement without reading or understanding the small print and it was held that she was bound by a clause excluding liability in damages for defects in the machine. However, where a signature is obtained using a misrepresentation as to its effect or fraud, the full force of the rule is then mitigated. In Curtis v Chemical Cleaning and Dyeing Co Ltd (1951), the plaintiff took a dress to be cleaned. She was induced to sign a document which, she was told, merely excluded the cleaner’s liability for damage to sequins. In fact, the document excluded liability for any damage to any property deposited for cleaning. The dress was returned stained in this case and the Court of Appeal held that the defendants were not protected by the clause because it extended further than their representation.
