Contract law Research Paper

An exclusion clause can also be incorporated in a contract by way of notice. In the case of Parker vs. SE Railway, the court held that an exclusion case was sufficiently incorporated as part of a contract if the party who put it took sets considered reasonable o bring to the attention of the other party the existence of the clause. The court also pointed out that if an exclusion clause is wide then the person relying on it as defense must show that he all the practically reasonable steps to bring the clause of the attention of the other party (Thornton Vs Lane Shoe Parking).

However the court was quick to point that for the notice to be considered valid and operational it must be brought to the attention of the other parties prior to the formation of the contract as was held in Olley Vs Marlborough. Another means in which an exclusion clause is incorporated in the contract is by the manner in which the parties to the contract have dealt with each other in a previous transaction. In David MacBrayne Ltd, it was held that an exclusion clause may be deemed to have been incorporated into a contract if the parties have dealt with each other in a similar manner in the past.

The courts are usually very strict when it comes to the application of exclusion clauses. One of the requirements of the court is that the party that wishes to rely on an exclusion clause must prove to the court that the manner in which he put it in the contract and the manner in which he brought it to the attention of the other party was sufficient. By so doing he shall have released himself from any liability. The exclusion clause must not have any ambiguity and if so be the case then the unclear or ambiguous parts of the clause will be interpreted against the party seeking to rely on the exclusion clause.

This is known as the contra proferentem rule. In the case of Darlington Future Ltd v. Delcon Australia Pty Ltd it was held that a court will usually apply the ordinary and natural meaning of words used in an exclusion clause although this will be done in harmony with the language of the whole contract. Another very major issue that courts will not allow is an exclusion clause that allows the party seeking to rely on it to evade liability that was caused by negligence or recklessness.

Parties to a contract will not be allowed to intentionally put exclusion clauses that will allow them to commit deliberate faults at the expense of the other party to the contract. However the exception to this general rule is that if negligence occurred during carrying out of authorized acts then the exclusion clause still remains effective. However if in the cause of carrying out the contract the set of circumstances changes then the exclusion clause ceases to be effective and the party who put in the contract will not be allowed to rely on it.