LAWS1001 Enterprise Law

Issue

The main issue, in this case, is to look after the provisions of contract law and decide if Bronwyn can render the exclusion clause invalid.

Rule

Exclusion provisions are the rules in contract law that restrict the contractual obligations of the other party. This provision is therefore a straightforward method of exempting a dominating party from any obligations owed by them towards the negotiating party (Lawson, 2011). This specifically applies in case the parties are supplier and customer. An exclusion clause is a legal arrangement under which one party wishes to limit the obligations of other parties either to fines or any other possible means that may arise while fulfilling the contractual obligations and thus breaching the contract. In short, the exclusion clause is a concept in a contract that prohibits contractual parties from the liabilities that occur due to breach. For validating the exclusion clause, certain essential rules need to be followed by the party relying upon the clause. There are three ways by which the party can include the exclusion clause in the contract: by signature, by notice, and by previous transactions.

Signed Exclusion clauses as a general concept, anybody who signs an agreement containing binding provisions is bound by the document's provision. To be more precise, once a person enters a binding agreement that has an exclusion clause, it becomes part of the contract immediately (McKendrick, and Liu, 2015). As a result, a person's signature will normally tie him to the conditions even though he has not seen or acknowledged the terms set out in the contract. Scrutton LJ stated the premise in L'Estrange v Graucob [1934] 2 KB 394 as follows: ‘When an agreement comprising terms of the contract is signed, then, in the absence of deception, or, I will say, false representation, the person signing it is obliged, and it is completely irrelevant if he has read it or not.' The appellant purchased an electric tobacco system from the defendants. She negotiated a purchase deal, which had some provisions that she could not read. As a result, the exclusion clauses bind L'Estrange. However, in a certain case, the provision in L'Estrange v Graucob would not apply. If the signed agreement may not fairly be considered as probable to include contractual provisions under the situations, the party would not be bound by the signature.

Application

The matter pertains to checking if that the attempt to rely on the exclusion clause, would be able to save Purdy from the owed liabilities due to the loss of two ornament boxes and the damages that were incurred to the other goods that were deposited by Bronwyn in the storage box of Purdy. This is because Bronwyn gave Purdy the goods for safekeeping in the locker, which were lost and damaged due to flooding and improper handling by Purdy’s employees. As one of the employees delivered some of the goods to another person without taking the storage receipt, which was a necessary condition while releasing the goods. In order for the exclusion clause to be valid, Purdy should have inserted it in the contract properly. Purdy did do so as the Storage Receipt covered this clause. Bronwyn had the opportunity of reading the terms written on the receipt she signed but she chose not to do so as she was in rush to sign it. Applying the case of L'Estrange v Graucob, the terms covered in this receipt are considered valid, irrespective of the fact that Bronwyn have read them or not while she signs the receipt. The same was held in this case, where the court held that signing the exclusion clause will render it valid unless misrepresented. Apart from this, the entrance had a clear sign that should have been read by Bronwyn as it was properly displayed, and in clear sight of people entering the storage facility of Purdy. In this Purdy mentioned that all the terms and conditions as to the storage facility are printed in the receipt. This shows that not only was the exclusion clause brought to Bronwyn’s attention, but he also signed it, making it a valid exclusion clause

Conclusion

Based on the rules of law and its applicability, the exclusion clause is held valid as it was properly brought into the notice of Bronwyn. Further, this was also represented in the board hung on the entrance and no misrepresentation was made by Purdy and thus Bronwyn is not entitled to claim damages for loss/damages of good. 

References

L’Estrange v Graucob [1934] 2 KB 394

Lawson, R.G., 2011. Exclusion clauses and unfair contract terms. Sweet & Maxwell.

McKendrick, E. and Liu, Q., 2015. Contract Law: Australian Edition. Macmillan International Higher Education.

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