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Discuss the rules that affect the effectiveness of exemption clauses.

      

Discuss the rules that affect the effectiveness of exemption clauses.

  

Answers

Maurice
(i) For a court of law to consider the effect of an exemption clause in a contract, it was in the
first instance be satisfied that the clause was an integral part of the contract. The party
affected by the clause must have been aware of its existence.

(ii) An exemption clause may be made part of a contract by signature or notice.

(iii) If the clause is embodied in a document signed by the parties, the court must be satisfied
that the document contained the terms of the contract. As was the case in L?Estrange
V.Graucob.

(iv) The court must in the same breath be satisfied that the party affected by the clause signed
the document voluntarily. Signature prima facie means acceptance. However the signature is
voidable at the option of the innocent party if its contents were misrepresented. As was the
case in Curtis V. Chemical Cleaning and Dyeing Co.

(v) The party affected by the clause must have been aware of its existence when the contract
was entered into. A belated notice of an exemption has no effect on the contract. As was
the case in Lougher V. Kenya Safari Lodges and Hotels Ltd.

(vi) If an exemption clause is ambiguous or uncertain, it must be interpreted Contra Proferentes
that is, strictly against the party relying on it. As was the case in Houghton V. Trafal gar Ins. Co.

(vii) As a general rule a third party cannot take advantage of an exemption clause in a contract it
was not party to. As was the case in Halal Shipping Co. Ltd V. Securities
BremerAllegemeine.

(viii) An exemption clause cannot as a general rule be given effect if doing so enables a party to
the contract evade the fundamental obligation of the contract. As was the case in
Karsales(Harrow) Ltd V. Wallis where it was held that although the exemption clause had
been incorporated into the contract, it could not be given effect as doing so amounted to a
fundamental breach of contract by the plaintiff.
The party alleging fundamental breach must prove it.
maurice.mutuku answered the question on May 3, 2018 at 06:41

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