Exclusion clause Exclusion clause is an exemption clause used in the contracts for which excludes one company s liability

completely for the specific purposes. Things that are excused in exclusion clause are known as exclusion clause. Exclusion clause cuts back the rights of parties to a contract. A party depending on the exclusion clause is to draft it perfectly so that it clears out the parties from the liability appearing there from. In case of doubts in terms and conditions, the courts more often clarifies the provision strictly against the party depending on the clause. Incorporation The person who wishes to stay on the exclusion clause must show that it has become part of the contract. Exemption clauses can be incorporated into a contract by three different ways: by signature, by reasonable notice, and by a previous course of dealing. Incorporation by signature: documents that are signed at the time of a building the contract, its contents becomes terms of that contract, even though they have been read or understood carelessly. This principle is called rule in L Estrange v graucob (1934). I the case of L Estrange v graucob the party could have avoided arguments with the company if the party had clearly understood the terms and conditions that were mentioned in the contract. In this case the company is not liable to the party for any reason as mentioned in the contract. Incorporation by reasonable notice: at the time when the contract is made different written terms are designed by handling over a ticket or by classifying them on a sign, for example these terms can only be part of contract if it may be said that recipient had reasonable notice of them. There are many of the rules on reasonable notice which come out of ticket cases which happened to be in the nineteenth century with the rise of companies availing the public transport by rail. Time of notice it is a rule that an exemption clause is only incorporated into the contract if the notice has been presented before ar at the time of contracting. In olley v Marlborough court ltd (1949) a married couple checked into a hotel room for a week and went to their given room where Mrs. Olley s fur coats were stolen. The hotel didn t take any responsibility for the missing items depending on the words of the notice but the court of appeal held that those words have not been indicated in the contract because they didn t stated to olley at that time but it was too late when those words were shown to her. The contract was prepared at the reception desk and new terms could not be applied on them when they arrived at their room. Interpretation by a previous course of dealing: if two of the parties have previously prepared a sequence of contracts among them and those contracts contained an exclusion clause that clause can also be functioned to a subsequent transaction even if the usual steps to incorporate the clause have not been in used.

In Spurling v bradshaw(1956): the parties were in the business together for lots of years . the defendants business was delivering eight barrels of orange juice to the plaintiffs who were the men working at the warehouse for storage. After a few days he got a document from them saying the clauses which exempted the plaintiffs from any loss or damage occurred by the negligence, or by mistake of themselves or their co-workers. Construction if it is set up that an exemption clause has been incorporated into a contract, the courts will then ensure to see that the clause literally covers the breach that has made. While having this responsibility they apply which is known as contra proferentem rule, which basically defines that where the words of an exemption clause are unclear, they will be taken to mean in the way least sympathetic to the party depending on them. While parties looking to exempt them from liability will frequently utilize unclear and ambiguous language in order to cover up their purpose, the contra proferentem may be of helpful tool. In Houghton v Trafalgar co (1954) the application of the rule may be seen. The case was about car accident where the rule under which the car was insured excluded the insurer s liability where the excessive load was being carried but the court of appeal held that the word Load should have been given broad interpretation relating to goods and not people, so as a result the clause did not exclude the insurer s liability, where the car was carrying lot of people rather than so much weight.

Unfair Contract Terms Act 1977 in several ways the heading of the act is confusing while it does not look forward to give standard of reasonable or unreasonable contract terms. Its main motive is to be in charge of the use of clauses excluding or limiting liability for committing breach of contract, especially where one of the parties is a consumer.