Revision business law

Exclusion clauses

In order to advice Alan, is necessary to consider the law to exclusion clause. Definition:

exclusion clause; it is a clause which attempts to revoke or limit liability at a happening of a

situation. There are three issues to be considered, firstly whether the clause has been

incorporated into the contract, the customer must be aware of the clause at or before the time

of the contract is made. Ollie vs the Marlborough Court. If the supplier has previously dealt

with the customer on a regular basis it may be possible to show incorporation by course of

dealing, Hollier v Rambler Motors. There is no indication that Alan had regular dealing with

ripoff motors, however, Alan has signed a contract, and it is usually considered a person

signing a contract is bound by it L’Estrange v Groucob, it appears most likely the clause has

been incorporated into the contract. Secondly it is necessary to consider the interpretation of

the clause, whether the clause is written widely enough to cover the alleged liability, Photo

Production v Securicor Transport ltd in interpreting a clause, the court will interpret any

doubt in the wording of the clause, against the party seeking to rely on it, contra proferentem

rule. It would appear the clause has been written widely enough to cover the alleged liability.

Finally, if Ripoff Motors successfully argues their defence in contract, it is therefore

necessary to consider the effect of UCTA section 2 (1) states liability to death or personal

injury arising through negligence cannot be excluded section 2 (2) states liability for all other

losses arising through negligence can only be excluded in so far as the clause meets the

reasonable test, the guideline the clause must be fair and reasonable in all respects, the second

example the relative bargaining strength of the parties must be considered

Therefore it appears most likely, Alan will succeed in an action in respect to his personal

injuries with regard to his other losses these will be the matter of the courts to decide.

Frustration

In order to advice the parties. It is necessary to consider the law relating to frustration. Based on the information given the contract to hire the bus can still be performed. However, from Colin’s point of view, performance will be pointless as the reason for hiring the bus no longer exist.

Therefore, it is likely failure on of the occurrence of events will frustrate the contract (Krell v Henry (1903)). Therefore, it is necessary to consider the remedies available under the Law Reform Frustrated Contracts Act (1943).

Under the Act any money due to be paid cease to be payable however, if one party has incurred expenses the court may allow them to keep all or part of any money paid. Colin is claiming a refund of his £250 deposit.

The Banger Bus Co will argue they should keep the deposit to cover the cost of servicing the bus.

It is unlikely the Banger Bus Co will succeed as they service the buses before each trip making it unfair for each Colin’s to pay the cost of someone else’s benefit.

Frustration

1 destruction or unavailability of the subject matter;

Taylor v Caldwell (1863)

2 the death or illness of one of the parties;

Condor v The Barron Knights (1966)

3 supervening illegality;

Fibrosa v Fairbairn (1943, HL)Avery v Bowden (1856).

4 government intervention;

Morgan v Manser (1947)

5 the event on which the contract is based fails to occur;

Krell v Henry (1903)

6 delay in performance.

Metropolitan Water Board v Dick Kerr & Co. (1918)

Payer’s right to recover prepaid sums (s 1(2))

All prepaid sums are returnable to the payer once the contract has been frustrated and any sum

already due ceases to be payable.

Payee’s right to recover expenses (s 1(2))

A proviso protects the payee. If the payee has incurred expenses in performance of the

contract before the frustrating event they may, at the discretion of the court, retain or claim up

to the maximum of any prepaid or pre-payable sum to cover those expenses, if with regard to

all the circumstances it is fair and just to do so.