ABSTRACT
In order for a clause to be effective at common law it must have been properly incorporated into the contract.75 Its language must cover both the actual event or breach that has occurred and the actual party attempting to rely upon the clause.76 In addition, in cases of ambiguity, the clause must be read contra proferentem.77 It seems, also, that if there is a very serious breach of contract – the breach of a fundamental term (see above) or a fundamental breach – the clause will specifically have to cover the breach and the damage that has occurred. For, there is a ‘rule of construction’ that an exclusion clause or similar provision should not be interpreted as covering a fundamental breach of contract.78 Put another way, ‘the agreement must retain the legal characteristics of a contract’.79
