Exclusion Clauses in Contracts

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The exclusion clause is an important device for allocating the risks between the contractual parties. However, the exclusion clauses could mostly be found in written contracts, especially standard form of contracts. Standard form contracts with consumers are often contained in some printed ticket, or delivery note, or receipt, or similar document. In practice, it is very common that if a person wants the product, he may have no alternative but to accept the terms drawn up by the other party even though such terms are disadvantage to him, or he may simply accept it regardless the possible unfavorable position because he does not trouble to read a long list of terms and conditions. Therefore, contracts are regularly signed, tickets are simply accepted, or a tick-box on a website is clicked, commonly between large companies and individual consumers. Both the common law and the statutory law have recognized the weaker position of consumers. It is well established an exclusion clause will be valid and enforceable only if it is incorporated in the contract, use clear wordings and does not contravene statutory limits. In order to limit the unfairness resulting from exclusion clauses, the courts have developed certain principles such as the doctrine of non est factum in signature cases, ‘red ink-red hand’ principle in relation to ‘onerous or unusual’ terms, contra proferentem rule when interpreting ambiguous exclusion clauses and ‘fundamental breach’ principle. It is well established that an exclusion clause will be valid and enforceable only if it is incorporated into the contract. There are several ways in which exclusion clauses can be incorporated into contracts . One way is by giving a sufficient notice. In J Spurling v Bra... ... middle of paper ... ...mended that in determining whether in an individual case the term or notice was fair and reasonable, both substantive fairness (‘the substance and effect of the term’) and procedural fairness (‘the circumstances existing at that time’) be taken into account. (42)And additionally there are requirements that the contract must be written in ‘plain, intelligible language’ for a reasonable person would understand. Section 7 of the CECO stipulates that the liability for death or personal injury resulting from negligence could not be excluded or restricted. For ‘other loss or damage’, the liability can be excluded only if the exclusion clause satisfies the requirement of reasonableness. And this section should remain unchanged. Last but not least, besides reforming the current law, it is also up to the consumers themselves to take responsibilities for their own protection.

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