Exclusion clauses at common law

Overview

Exclusion clause, contra proferentem rule and doctrine of fundamental breach.

What you need to know

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Questions from this subtopic

Each one with the model answer underneath.

1. 1

   What is an exclusion clause?

   Model answer

   An exclusion clause is a term that seeks to exclude liability that would otherwise arise. A limitation clause caps that liability instead of removing it.

2. 2

   What three questions does a court ask about an exclusion clause?

   Model answer

   A court asks whether the clause was incorporated, whether its wording covers the loss, and whether statute controls it. Failure at any stage prevents the clause from operating.

3. 3

   What is the contra proferentem rule?

   Model answer

   The contra proferentem rule resolves ambiguity in an exclusion clause against the party relying on it. The drafter bears the risk of unclear wording.

4. 4

   Which case shows contra proferentem applied to an insurance policy?

   Model answer

   Houghton v Trafalgar Insurance [1954] concerned a clause excluding cover when the car carried an excess load. The ambiguous word load was read against the insurer, who could not rely on the clause.

5. 5

   What guidance governs a clause said to exclude liability for negligence?

   Model answer

   Canada Steamship Lines v The King [1952] set out guidance on excluding liability for negligence. Express reference to negligence is the clearest way to achieve it.

6. 6

   What happens where a clause could cover a liability other than negligence?

   Model answer

   White v John Warwick & Co [1953] held that general words covered only the strict contractual liability. The clause did not protect the supplier against liability in negligence.

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