80 5: Content of contracts Part B The law of obligations
4.1 Incorporation of exclusion clauses
The courts protect customers from the harsher effects of exclusion clauses by ensuring that they are
properly incorporated into a contract and then by interpreting them strictly.The law seeks to protect customers (usually the weaker party to the contract) from the full force of
exclusion clauses. They do this by applying the 'letter of the law' to see if such clauses have been
incorporated correctly. Where there is uncertainty the clauses may be excluded from the contract.
Such uncertainty can arise in several circumstances.
The document containing notice of the clause must be an integral part of the contract.
If the document is an integral part of the contract, a term may not usually be disputed if it is
included in a document which a party has signed.
The term must be put forward before the contract is made.
If the contact is not signed, an exclusion clause is not a binding term unless the person whose
rights it restricts was made sufficiently aware of it at the time of agreeing to it.
Onerous terms must be sufficiently highlighted (it is doubtful whether this applies to signed
contracts).4.1.1 Contractual documents
Where the exclusion clause is contained in an unsigned document it must be shown that this document is
an integral part of the contract and is one which could be expected to contain terms.Chapelton v Barry UDC 1940
The facts: There was a pile of deck chairs and a notice stating 'Hire of chairs 2d per session of three
hours'. The claimant took two chairs, paid for them and received two tickets which were headed 'receipt'
which he put in his pocket. One of the chairs collapsed and he was injured. The defendant council relied on
a notice on the back of the tickets by which it disclaimed liability for injury.
Decision: The notice advertising chairs for hire gave no warning of limiting conditions and it was not
reasonable to communicate them on a receipt. The disclaimer of liability was not binding on the claimant.Thompson v LMS Railway 1930
The facts: An elderly lady who could not read asked her niece to buy her a railway excursion ticket on
which was printed 'Excursion: for conditions see back'. On the back it was stated that the ticket was
issued subject to conditions contained in the company's timetables. These conditions excluded liability for
injury.
Decision: The conditions had been adequately communicated and therefore had been accepted.4.1.2 Signed contracts
If a person signs a document containing a term, they are held to have agreed to the term even if they have
not read the document. But this is not so if the party who puts forward the document for signature gives a
misleading explanation of the term's legal effect.L'Estrange v Graucob 1934
The facts: The defendant sold to the claimant, a shopkeeper, a slot machine under conditions which
excluded the claimant's normal rights under the Sale of Goods Act 1893. The claimant signed the
document described as a 'Sales Agreement' and including clauses in 'legible, but regrettably small print'.
Decision: The conditions were binding on the claimant since she had signed them. It was not material that
the defendant had given her no information of their terms nor called her attention to them.FAST FORWARD