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Business Law Analysis Its Benefit When any contract is made then there are several terms that are made part of it. The present ask analyses one such term, that is, exclusion clauses. However, apart from an exclusion clause the task also gave a brief understanding on the importance and effects of various kinds of terms, such as, Business Law Analysis Its Benefit | Affordable Strategic Advice for Businessesconditions and warranties, its meaning effect and importance.

The major issue that is analysed after understanding the case scenario is Whether Dex & Co (firm) can protect itself against the liability caused to Bertram on the basis of

  1. The clause in the contract wherein a clause is a term in a contract;
  2. The notice in the car park wherein a notice was a warning that was displayed by the firm. .

Relevant law

Contract terms – Express, condition, warranties

Whenever, a contract is established by two or more parties, then, they mutually decide the terms and conditions of the contract. These terms can be express or implied in nature. The terms which are either verbally (Bannerman v. White (1861) or in written form (Duffy & Ors v. Newcastle United Football Co. Ltd. (2000) are mutually decided by the parties are called express terms but the terms which are obligated on the parties to be performed under law, custom, precedent or usage then such terms are called implied terms (Attorney General of Belize v. Belize Telecom Ltd. (2009). (Weitzenböck 2012)

The express terms can further classified into conditions and warranties. Those express terms which are root to any contract and non performance of which will make a contract redundant are called conditions (Poussard v Spiers (1876). A breach of condition will permit the plaintiff to terminate the contract and demand compensation from the defaulter. But those terms which are not essential and will not hamper the contract sanctity are warranties and will only allow the plaintiff to seek compensation and will not terminate the contract (Bettini v Gye (1876). (Elawresource UK 2016)

Exclusion Clause

Apart from a condition and warranty there is yet another very important term that is normally found in any contract is exclusion clause. Basically a clause which excludes or limits the obligation of a party to a contract by taking approval from another party to the contract then such causes are called exclusion clauses. These types of clauses can be made part of the contract by various means, such as:

  1. By putting signatures by the parties. The general rule is when the parties put their signature in the contract then they are abiding the terms of the contract (Chapelton v Barry Urban District Council (1940). If any party is not relying on the clause by specifying that he is not aware of the clause, then, the party has to prove that all reasonable efforts were taken by him to bring the clause within the notice of the other party (L’Estrange v Graucob (1934). Thus, knowledge of clause is very essential but can be dispense if reasonability is proved by the relying party (Olley v Marlborough Court (1949). (The Law Teacher 2016)
  2. By course of dealing the parties may bind themselves by the clause (McCutcheon v MacBrayne (1964). (The Law Teacher 2016)
  • By putting notices in the form of displayers or signboards. It is necessary to bring the warning notices which exclude the liability of one party within the knowledge of the other party by all reasonable means and efforts of the first party in order to hold an exclusion clause valid. If the non-relying party is no aware of the clause then the relying party must prove that reasonable efforts are made to bring such clause within the notice of other party (Thompson v LMS Railway (1930). (The Law Teacher 2016)

Also, section 2 and section 3 of Unfair Contract Terms Act 1977 also deals with exclusion clause. According to section 2, if the clause excludes liability out of personal injury or death because of negligence then such clauses are void. Section 3 submits that any clause limiting or excluding the liability which is arising out of breach of contract is not valid and is void unless and until the clause is reasonable.  (GovUK 2016)

Also, as already said, when the terms are ambiguous then Contra Preferential Rule must be applied according to which the meaning to the words must be construed against the person who has out them in the contract and is held in Bramall & Ogden v Sheffield City Council (1983).  This is normally done when the terms are put into contract unilaterally and thus no disadvantage must be caused to the party who was not involved when the term was incorporated ((Hollier v  Rambler Motors). (Shemmings 2016)

Thus, this is the relevant law which is now applied to the given facts and circumstances.

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Application and Conclusion

The firm is relying on two separate exclusion clauses, each of them are discussed here in below:

  1. The clause in the contract – when the contract was made amid the firm and Bertram then a clause was made part of such contract which submits that ‘the firm is not liable for any loss caused to a client, whether as a result of the negligence of the firm or otherwise’. The contract was signed by the parties but Bertram was not aware of the same. When because of firm negligence a loss of £2,000 is caused to Bertram then the main question that arises is whether can firm rely on such exclusion clause or not? The firm can rely on the exclusion clause provided the clause is brought within the knowledge of Bertram before the contract was signed by the parties. If the firm can prove that it has taken all reasonable efforts to bring the clause within the knowledge of Bertram before he signed the contract then the clause is applicable and the firm can protect itself from the liability otherwise not. For instance, in (Olley v Marlborough Court (1949), the cause was not applicable as was not within the knowledge of the contracting parties. If the firm was not able to prove that it has taken reasonable steps to bring the existence of exclusion clause within the knowledge of Bertram, then, such clause is not applicable and the firm cannot rely on the clause and Bertram has full right to sue the firm for the loss so sustained by him because of firms negligence.
  2. The notice in the car park – When Bertram visited the office of the firm, then, he parked his car in the firms car park where a notice was displayed stating that ‘Dex & Co accept no responsibility for damage to clients or their vehicles when parked here’. The notice excludes the liability of the firm.

Now, the said notice will only limit the liability of the firm provided the notice is within the knowledge of Bertram. But, the notice was not read by him. However, by applying the law in Thompson v LMS Railway (1930) it was held that reasonable efforts are made by the firm to bring the notice within the knowledge of Bertram as the same notice was put up at a place which was reasonable seen by any person to read. Thus, Bertram is liable by such notice and the firm can exclude its liability which arises because if the injury caused to Bertram because of two roof tiles falling on to him.

Thus, the advantage of using an exclusion clause lays in the fact when the clause is within the knowledge of the contracting parties or when the relying party has taken all reasonable steps to bring such clause in the knowledge of other contracting parties. thus, Bertram has full right to sue the firm for the loss so sustained by him because of firms negligence as the contractual clause was not ith his knowledge but  Bertram cannot sue for his car loss as the warning notice was reasonable foreseeable and readable by him.Order Now