Exemption Clauses: Construction

[Flash Card 1 of 1]

Contra proferentem rule

• ambiguous or unclear clause: construed against (contra) / person seeking rely upon it (proferens) / applies to all clauses including exemption clauses
• 6 people in 5 seater car / D sought rely on exemption: excess load / clause not cover passengers (Houghton v Trafalgar Insurance [1954])

Negligence

• 3 stage test / 1: if expressly exempts liability negligence is effective otherwise / 2: if ordinary meaning of words wide enough to include negligence / 3: if clause cover other liability (eg strict liability) will not cover negligence but restricted to other liability (Canada Steamship Lines Ltd v R [1952])
• P's aeroplane damaged paving stone at D's airport / held: all circumstances considered to determine liability parties intended on agreeing / rather than excluding liability if there is alternative legal liability ( Stage 3 Canada Steamship Lines test) (Monarch Airlines Ltd v London Luton Airport Ltd [1997])

Very serious breaches

• fundamental breach doctrine: courts reluctant allow exemption clause /if serious or deliberate breach / since UCTA 1977 modified
• factory fire / £615 000 damage / P's argued fundamental breach exemption not valid / held: D could rely on exemption / matter of construction if clause covers breach / no rule substantive law prevent reliance if serious breach / Lord Wilberforce: parliament chosen legislate protect consumer (UCTA 1977) but not commercial context / courts should not interfere (Photo Production Ltd v Securicor Transport Ltd [1980])

bits of law