Exemption clauses exclude/limits liability 2

Exemption clauses exclude/limits liability
2. Exemption clauses do not give freedom of contract – allows the benefit of the buyer to be restricted or excluded
3. Exemption clauses do not give equality of bargaining power
4. Exemption clauses only protect the defendant
5. Evades liability on contract or tort – Thornton v Shoe Lane Parking

A principal goal when drafting exclusion clauses, liability caps and entire agreement clauses is certainty. The various clauses and strategies considered above all arise from attempts by contracting parties to distribute risk contractually in order to bring a degree of certainty to their dealings: certainty about the circumstances in which one party may be held liable to the other; certainty about the kinds of damage for which they may be liable; certainty about the maximum amount for which they risk being liable; and (in the case of entire agreement clauses) certainty about precisely what it is that they have agreed.??

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To succeed in this objective, a clause should be drafted to take account of the various issues discussed in this article. It must also be clear and unambiguous, well-defined in scope, and precise in application. In many circumstances it must also satisfy UCTA and its requirement of reasonableness, a subject which we have touched on briefly but that must await another Back to Basics article for more detailed treatment.?

This article discusses exclusion clauses and instances when a court should intervene to limit the operation of such clauses. The aouthor argues that exclusion clauses which are used improperly have the potential to damage the nature of contract by undermining the transfer or creation of rights under the contract. More specfifically the author discusses that exclusion clauses may eliminate obligations owed under the contrat or absolve one party from liabitlity completetly. The author further argues that exclusion clauses allow for the unilateral alteration of the allocation of risk under a contract. In discussing these issues the author makes reference to Canadian case law particularly the supreme court of Canadas views on appropriate limits on enforcement of exculsion clauses. In conclusion the autor considers the validity of public policy as a ratioale to address the various problems created by exclusion clauses.


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