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Questions and Answers
Exemption clauses are contractual terms that exclude or limit one party's liability for breach of contract, negligence, or other wrongdoing.
Exemption clauses are contractual terms that exclude or limit one party's liability for breach of contract, negligence, or other wrongdoing.
True
Exclusion clauses limit the amount of liability for specific types of loss or damage.
Exclusion clauses limit the amount of liability for specific types of loss or damage.
False
The Unfair Contract Terms Act 1977 only applies to non-consumer contracts.
The Unfair Contract Terms Act 1977 only applies to non-consumer contracts.
False
The reasonableness test is not applicable to exemption clauses in non-consumer contracts.
The reasonableness test is not applicable to exemption clauses in non-consumer contracts.
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Under common law rules, ambiguous exemption clauses are construed in favor of the party seeking to rely on them.
Under common law rules, ambiguous exemption clauses are construed in favor of the party seeking to rely on them.
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If an exemption clause is invalid under UCTA, it can still be enforced if it would be valid under common law rules.
If an exemption clause is invalid under UCTA, it can still be enforced if it would be valid under common law rules.
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Study Notes
Exemption Clauses
Definition
- Exemption clauses are contractual terms that exclude or limit one party's liability for breach of contract, negligence, or other wrongdoing.
Types of Exemption Clauses
- Exclusion clauses: exclude liability for specific types of loss or damage.
- Limitation clauses: limit the amount of liability for specific types of loss or damage.
Effectiveness of Exemption Clauses
- Unfair Contract Terms Act 1977: restrictions on the use of exemption clauses in consumer contracts.
- Reasonableness test: exemption clauses must be reasonable to be enforceable.
- Notice: exemption clauses must be brought to the attention of the other party to be effective.
Unfair Contract Terms Act 1977
- Section 2(2): exemption clauses in consumer contracts are invalid unless they satisfy the reasonableness test.
- Section 11: exemption clauses in non-consumer contracts are subject to the reasonableness test, but can be enforced if reasonable.
Common Law Rules
- Contra proferentem: ambiguous exemption clauses are construed against the party seeking to rely on them.
- Fundamental breach: exemption clauses may not protect against fundamental breaches of contract.
UCTA and Common Law Interaction
- UCTA prevails: if a exemption clause is invalid under UCTA, it cannot be enforced, even if it would be valid under common law rules.
- Common law rules apply: if a exemption clause is valid under UCTA, common law rules (e.g. contra proferentem) can still apply to its interpretation.
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Description
Test your knowledge on exemption clauses, including types, effectiveness, and regulation under the Unfair Contract Terms Act 1977. Learn how to apply the reasonableness test and common law rules to exemption clauses.
