Exclusion Clause

An exclusion clause is where one party to the contract has incorporated a term into the contract which purports to exclude his liability for his own breach of the contract. It is, therefore, necessary to determine how far such a clause may be effective. The original rules relating to the incorporation and effectiveness of exclusion clauses within a contract were developed by the Common Law. Although the position today is now largely governed by statute, the Common Law rules may still be referred to and thus the student must understand their applicability. The Common Law rules were developed by the courts in an attempt to control the incorporation of exclusion clauses and to enable the courts to at times say that certain exclusion clauses were ineffective. They are particularly important in connection with the publication by a company or a trade association of Standard Trading Conditions. The exclusion clause must be properly incorporated into the contract. It cannot be incorporated once the contract has been formed. Thus, in Thornton v Shoe Lane Parking (1971). The ticket produced by an automatic car park barrier referred to conditions displayed inside the car park which purported to exclude liability for damage to cars and damage to drivers. It was held that notice of the exclusion clause had been given after the contract was formed. The contract was formed when the driver took the ticket from the machine. Therefore, additional terms, such as exclusion clauses, could not be incorporated after that point.