law exemption clause

EXEMPTION CLAUSES

BTW 1042 Sem. 1 2014

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Relevant chapters •

Chapter 9 – Exemption Clauses

•

Chapter 10 – Unfair Contract Terms

Trakic A., et al., Law for Business, (Sweet &









Introduction One may wonder and ask why the law would assist someone to avoid liability arising due du e to a breach of contract? contract? Freedom to contract









Exemption Clauses = Disclaimers









Exemption Clauses?









Exemption clauses











Exemption clauses Exemption Clauses











Exclusion Clauses - Examples •

THE MANAGEMENT CANNOT ACCEPT ANY LIABILITY FOR LOSS OR DAMAGE CAUSED TO ANY VEHICLE OR ITS CONTENTS WHILST PARKED IN THIS CAR PARK.











Limitation Clauses - Examples •

THE COMPANY WILL NOT BE RESPONSIBLE FOR ANY PACKAGE EXCEEDING THE VALUE OF $100 .

•

THE COMPANY’S LIABILITY ARISING OUT OF OR RELATED TO THIS











Exemption Clauses in Malaysia •

The Contracts Act 1950 contains no provision dealing with exemption clauses.











Exemption Clauses... •

Three step approach (three hurdles):













Step 1 - Is the EC a term of the contract?













Incorporation of EC by Signature













Exception 1: Fraud and Misrepresentation













Cont…













Exception 2: Unfair Contract Terms Terms









































































































Cont… •

Photo Production Ltd v Securicor Transport Ltd [1980] 2 WLR 283

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In this case a Securicor Transport Transport security guard was put in charge of guarding Photo Production's building. The agreement agreement between Securicor and Photo Productions contained an exclusion exclusion clause that absolved Securicor from any liability for "injurious act or default by any employee employee of the company." company." While the security guard was on patrol of the Photo Productions building he intentionally started a fire that destroyed the whole building. Could Securicor rely on the exclusion exclusion clause to escape liability for their employee's conduct? Photo Productions argued that the clause could not apply under the doctrine of fundamental breach. That is, the breach of the contract was so huge that it invalidated the whole









The Four Corners Rule •

The four corner rule is that an exemption clause is effective only in relation to damage that occurs within the four corners of the contract.

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The idea is that a party should not be able to rely on an exemption clause to escape liability if it acts outside the terms of the contract.

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For example: where a carrier without justification deviates from an agreed route; bailor stores goods in place other than that agreed, they cannot invoke exemption clause to limit the liability.

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Something outside the ‘four corners’ of the contract will not be covered. • Sydney Corporation v West –

(1965) 114 (1965) 114 CLR 481,

Each exemption clause must be construed/interpreted in the light of the contract as a whole.









Step 3 – Is the exemption clause unfair? •

See Unfair Contract Terms slide

•

See English doctrine of unequal bargaining power or unconscionable contract contract

•

See Part IIIA of the Consumer Protection Protection (Amendment) Act 2010

law exemption clause

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