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Exclusion Clauses

Exclusion clauses are clauses, usually written down, that say that one party to the contract will not be responsible for certain happenings. For example, if you join a gym, it is common for the contract to say that the gym owner will not be responsible if you are injured while exercising. If you arrange to park your car in a public carpark for a fee, the owner will often seek to include in the contract a provision that they will not be responsible for damage to your vehicle, or theft of goods from it, while it is in the carpark.

These clauses can be valid, as long as:

  • they have been properly included in the contract and

  • are not contrary to law.

To be properly included in the contract, the clause cannot be tacked on after the contract has been made. If there is a signed contract containing the clause, this will usually have the effect of including it. If there is no signed contract, but there are printed documents or signs posted stating the terms, these can be included in the contract if they are brought to your attention before the contract is made.

For example, a driver entering a car park who takes a parking ticket from a machine is only bound by terms which are brought to their attention before taking the ticket. This is because the contract is formed when the ticket is taken. The car park owner cannot rely on an exclusion clause printed on the back of the ticket if they did not do anything beforehand to make the driver aware of it, for example, by prominently displaying the exclusion clause at a point before the ticket is taken. If the car is damaged due to insufficient care by the parking company, it will be liable despite the exclusion clause [Thornton v Shoe Lane Parking Ltd. (1971) 1 All ER 686].

What are reasonable steps to take in order to draw a condition to the notice of a consumer will vary from case to case. Although most car parks now have printed signs in front of their ticket windows stating that they accept no responsibility for cars left on their premises, (which probably makes it an exclusion clause that is a term of the contract) there are still ways in which the effects of these clauses can be avoided.

The exclusion also has to be legal. There are some important obligations to a consumer that are placed on a trader and these are implied by statute into consumer contracts and cannot be excluded, see: unsatisfactory goods and services and Exclusion Clauses and the Australian Consumer Law.

Courts always give exclusion clauses the narrowest reading possible, and where there is any doubt the interpretation most favourable to the consumer is adopted. An exclusion clause will generally not cover a breach which occurs outside the 'four corners' of a contract, such as where a trader does something that was not authorised by the contract.

Where a trader has attempted to limit or exclude liability of an implied term a consumer should seek legal advice as the law on this point is both complex and uncertain.

Exclusion Clauses  :  Last Revised: Tue Jan 4th 2011
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