Large powerful firms have legal teams at their disposal for the writing of contracts. These contracts may be cleverly and creatively worded so that in cases of a breach, their liability is limited or even excluded. Legislation in the form of the Unfair Contract Terms Act 1977 and the Unfair Terms in Consumer Contracts Regulations 1999 have been introduced to protect consumers from the imposition of such clauses where they are considered to be unfairly biased in this way. This is dealt with here.
But not all limitation or exclusion clauses are unfair. Consider use of the phrase: “Management cannot accept liability for any possessions lost, stolen or damaged on the premises”. But what if this were to be used in relation to a cloakroom or left luggage room? In those situations one party may try to rely on such a clause in order to avoid negligence and having to pay damages. But the other party may claim that the clause in legally invalid and cannot be used to escape liability. So what does the law say about exclusion clauses and whether they can be successfully relied on?
Well, there are two considerations, firstly whether the exclusion clause has actually been incorporated into the contract through the agreement of both parties, by reasonable notice or by strong implication. Secondly, a court will consider whether the clause does in fact cover the issue which is in dispute. It may be that the wording is vague, ambiguous or incomprehensible, in which case it cannot be said to apply to the issue, and therefore the party in breach cannot escape liability.