Exclusion and Limitation Clauses

Overview

Recall questions on what each clause does, how they differ, the first common law requirement and the effect of signing without reading.

What you need to know

Answer each one before you reveal it.

Questions from this subtopic

Each one with the model answer underneath.

1. 1

   What is an exclusion clause?

   Model answer

   A term in a contract that seeks to exclude or limit one party's liability for breach of contract or negligence.

2. 2

   How does a limitation clause differ from an exclusion clause that excludes liability entirely?

   Model answer

   A limitation clause restricts liability to a specified maximum amount rather than excluding it completely.

3. 3

   What is the first requirement for an exclusion clause to be effective at common law?

   Model answer

   It must be incorporated into the contract.

4. 4

   If a party signs a contractual document containing an exclusion clause but has not read it, are they bound by that clause?

   Model answer

   Yes, a party who signs a contractual document is bound by its terms, including exclusion clauses, whether or not they have read them.

5. 5

   What conditions must be met for an exclusion clause in an unsigned document to be incorporated into a contract?

   Model answer

   Reasonable steps must have been taken to bring the clause to the other party's attention before or at the time of contracting.

6. 6

   How does the nature of an exclusion clause affect the degree of notice required for incorporation?

   Model answer

   The more onerous or unusual the exclusion clause, the greater the degree of notice required to incorporate it.

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