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8 Exemption clauses

An exemption clause in a contract is one which seeks to exclude or limit in
some way one party’s liability toward the other. Over a period of time these
clauses had been used in an oppressive way, where a person in a weak
bargaining position had little say in the formation of a fair contract. The
courts have therefore limited the use of these clauses through case law, and
in addition Parliament has made substantial changes to the common law
position through statute.
There are two types of exemption clause:

• limitation clauses – where a party limits liability in a contract;


• exclusion clauses – where a party tries to avoid any liability at all in a
  contract.

‘What are they trying to avoid?’

The management

will take no

responsibility

whatsoever for

damage to clients’

property, however

caused

Any damage to

customers’

property will be

limited to the

replacement value

or £15, whichever

is the lower

An exclusion clause A limitation clause

Figure 8.1

Can you distinguish between the limitation and exclusion clauses above?

We do not take

any responsibility

for ...