Exclusion clauses and unfair terms

This chapter deals with exclusion clauses and unfair terms within a contract. Exclusion or limitation, often referred to collectively as ‘exemption’ clauses, can be extremely contentious, as consequential losses incurred by a party that the other party is seeking to avoid due to a failure in performance can be substantial. It is neither immoral, nor abnormal, for parties to seek to control any risks that may arise in relation to the contract. Indeed, under the freedom of contract doctrine, parties should be free to agree whatever terms they wish with minimal interference. The common law has considered these clauses for many years. Such clauses have long been used between businesses, especially in standard form contracts. Indeed, in Goodlife Foods v Hall Fire Protection, ¹ Coulson LJ went as far as to say that ‘all companies seek to rely upon some form of exclusion or limitation of liability clause’.