EXCLUSION CLAUSES

EXCLUSION CLAUSES

Also known as an exemption clause. An exemption clause has the effect of limiting the liability of the contracting parties.Eg.-park at your risk, swim at your risk.

The General Rule

The general rule is that a party who signs a written contract is bound by the terms contained therein. In the case of Estrange v Graucob [1934] 2 KB 394 at page 403 the Court held that a person is bound by the contract ".. whether he has read the document or not" per Scrutton LJ.

However, many contracts are entered into between parties where, either there is no written contract or the contract is not signed by the parties.The question that arises is whether adequate notice of the terms of the contract had been given to the party before or at the time the contract is entered into.The principle of law is particularly important in the area of exemption clauses.

Requirement that notice of Exemption Clause must be given.

Olley v Marlborough Court Ltd.[1949] 1 KB 532
Thornton v Shoe Lane Parking [1971] 2 QB 163

These two cases held that where no notice is given to the party contamporaneously, the exemption clause is ineffective.

Ghee Seng Heng v Ling Sie Ting (1992, unreported), 3(2) Mallal's Digest, 4th edition, paragraph 2685, HC.

In this case. the Defendant agreed to ship a motor vehicle belonging to the Plaintiff from Kuching to Limbang. During the course of the journey, the defendant's vessel carrying the plaintiff's motor vehicle sank, and as a consequence the plaintiff sued the defendant for breach of contract. The defendant relied on an exemption clause contained in the frieght bill advice.As there was no evidence to indicate that the exemption clause was brought to the Plaintiff's attention,it was held that the defendant could not rely on the ecxemption clause.

In the Singapore case of Kua Lee Ngoh v Jagindar Singh t/a Speedway Station [1987] SLR 239

The owner of a car sent the car for servicing to the defendant.When the owner returned to collect the car, he was told that the car had been stolen.The owner then sued the defendant for breach of contract.The defendant relied on 2 exemption clauses
which had been placed in the defendants premises.

It was held by the High Court that as there was no evidence that the plaintiff had notice of the exemption clause, the defendants were liable.

Exemption Clauses contained in Receipts.
Chin Hooi Naan v Comprehensive Autpo Restoration Service Sdn.Bhd & Anor[1995] 2 MLJ 100 HC
The owner of a car parked his car at therespondents premises in the basement of the Sungai Wang Plaza Complex, for the purposes of having the car waxed and polished.The owner was given a receipt with which he claim the car. When he came to collect the car, the car had been damaged.The respondents relied on an exclusion clause to evade liability.

Siti Norma Yaacob J observed :-

Before me the issue is whether an exemption clause can absolve the respondents from any blame for the damages caused to the car.The law on this is quite settled in that an exemption clause however wide and general does not exonerate the respondents from the burden of proving that the damages caused to the car were not due to their negligence and misconduct.

They must show that they had exercised due diligence and care in the handling of the car. Sze Hong Thai Bank Ltd v Rambler Cycle Co [1959] MLJ 200 and Port Swettenham Authority v TW Wu & Co(M) Sden . Bhd.[1978] 2 MLJ 137, are authorities for this proposition of law.

Has to be a term of the Contract – Playing Cards v China Navigation.

The contra peferentum rule- if the clause has more than one meaning- the Courts will interpret it against the person who inserted it.

Wallis Son & Wells v Pratt & Haynes-

seller described seeds as ‘Common English Sanfoin’ - later delivered low quality seeds- seller liable.

Playing Cards v China Navigation-

“shall not be liable for late or early arrival” arrived late- exemption clause valid- not liable.

Exclusion Clauses in cases of negligent liability

Hollier v Rambler Motors-

“not responsible for damage caused by fire” Court Held- exclusion clause only effective in the absence of negligence.

Width of the clause- must cover the liability eg. “Management not responsible for theft or loss”

Fundamental Breach-The Consumer Protection Bill 1999-“ not responsible for death or personal injury” = not valid.