Exclusion Clause, Limitation Of Liability, And Part Payment Of Debt In Contract Law

Incorporation of Exclusion Clause

The most relevant rule which needs to be discussed to address the issue in this situation is that of a exclusion clause.

The incorporation of a clause in a contract: A document which has the contractual terms have been signed and there is no scope of misrepresentation, or fraud the terms would be binding on the party and it is immaterial that the document was read on not. L’Estrange V Graucob [1934] 2 KB 394 (Kötz 2017 p 20)

An exclusion clause can be added into the contract through notice. However the notice has to be in the place where the contract was formed between the parties. If the notice is provided after the formation of a contract it is not incorporated as its terms. Olley V Marlborough Court [1949] 1 KB 532 (Kötz 2017 p 22)

Hollier V Rambler Motors [1972] 2 AB 71 an exclusion clause can be made the part of the contract through the course of dealing. The plaintiffs have visited the garage of the defendant four times in five years but the court held that this was not a sufficient course of dealing. Hollier V Rambler Motors [1972] 2 AB 71 (Kötz 2017 p 21)

Any form of exclusion clause has to be brought to the notice of the party before a contract between them has been formed. A clause which has been attempted to be added after the parties have entered into the contract is not binding upon the parties. In addition it is the duty of the party who is incorporating the clause to bring it before the notice of the other party through an extra effort as the clause was destructive of rights. Thornton V Shoe Lane Parking [1971] 1 All ER 686 (Hunter 2017 p 17)

An exclusion clause has been defined by Andrews (2015) as a term of a contract which purports to discharge or limit the liability of a one of the parties to the contract in certain situations which have been provided through the term. The clause can be made a part of the contract which the intention of limiting liability in case of negligence and contract breach. However there are specific situations in which the parties to the contract would be able to rely on the exclusion clause.

The incorporation of the exclusion or limitation of liability clause is only done when it is proved that it a part of the contract. There are three ways in which a clause is made a part of the contract which includes through signature, through notice and in the course of dealing

Limitation of Liability Clause

The exclusion contract in this case has the capacity of limiting the liability of the car par but only if it has been incorporated properly as provided by the case of Olley V Marlborough Court.

In the give situation it has been provided that David has never been to Hahndorf before and has parked his car in a car park near a store. Thus as per the this fact where the application of the case of Hollier V Rambler Motors is done it is clear that there is no chances of the clause being incorporated into the contract through the course of dealing as David has never visited the car park before.

The entrance of the car park as per the facts of the case had a large sign at the gate which stated the exclusion clause in context. In the case of Thornton V Shoe Lane Parking it had been stated by the court that the exclusion clause by notice has to incorporate before the contract had been formed between the parties. In addition the court stated that it is the duty of the party who is incorporating the clause to bring it before the notice of the other party. David had entered into the contract with the car park when he purchased the tickets and the exclusion clause which was widely destructive of rights had not been notified to him properly as mandated by this case. Thus it can be stated that David is not bound to the exclusion clause as it had not been added legally to the contract. The argument which can be provided by the parking lot in the given situation would be based on the case of L’Estrange V Graucob which stated that once a term has been signed it is legally binding irrespective it being read. However this would not be a very strong agreement as there are various exceptions to this rule which are applicable in the circumstances as discussed above.

Whether Emily is entitled to claim the remaining money from David?

When A owes a certain amount of money to B and B had made a promise to A that he will accept a lower amount of money from A as a total debt settlement and through reliance on such promise the A made lesser payments and B made a claim from the remaining balance in this situation the B is entitled to the total amount of money which A owed to him. This is because no additional consideration had been provided to A by B with respect to the acceptance of lesser payments. Only if the payment had been made on any earlier date or to a different location or with an additional fixture can a part payment be valid. Pinnel’s Case (1602) 5 CoRep 117a. (Austen-Bakee 2017 p 34)

Part Payment of Debt in Contract Law

The provisions of part payment of debt had also been discussed in the case of Foakes v Beer (1884) 9 App Cas 605. (Austen-Bakee 2017 p 34)

The doctrine of promissory estoppel can prevent a party from going back on a promise. However the doctrine is only applicable when there has been a change in position of the parties to who had relied on the promise. Alan v El Nasr [1972] 2 WLR 800. (Austen-Bakee 2017 p 40)

Promissory estoppels can be only applied for the purpose of defending a claim rather than bring a claim. It cannot be used as a sword but only as shield. Central London Property Trust Ltd v High Trees Ltd [1947] KB 130. (Austen-Bakee 2017 p 44)

It has been provided through the case study that David had entered into a contract with Emily whereby he has procured 5 chairs at a rent of $300 per chair. However it has been provided that the business of David had not been going well as he had requested Emily to accept a price of $200 per chair every month. The request had been agreed upon by Emily in the situation. However through the application of Pinnel’s Case it can be stated that as David has not provided Emily with any additional consideration against her accepting less payments the part consideration which has been paid by David is not valid. In addition this position of David can be further supported through the application of the case of Foakes v Beer. As per this case also as David has not provided Emily with any additional consideration against her accepting fewer payments the part consideration which has been paid by David is not valid. The payment would have been valid in case David would have made the payment on any earlier date or to a different location or with an additional fixture.

In addition as per the case of Alan v El Nasr the doctrine of promissory estoppels can only be applied in situation where a promise had been made and there has been a change in position of the party. However in the given situation there has been no change in position of David because of relying on the promise made my Emily. Thus the doctrine would not be applicable.

In relation to David it can be stated he has a right to rely on the defense in relation to promissory estoppels. Further in this case the claim is to be made by Emily and not David and it had been provided specifically by the case of Central London Property Trust Ltd v High Trees Ltd that promissory estoppels can only be applied for the purpose of defending a claim which has been by the promisor. Thus David can argue based on the rules of promissory estoppels. However the position of David is not very strong as the case of Emily in relation to Part payment of consideration rules is much stringer and there has been no change in position of David due to the promise.

Rescinding a Contract

It can be concluded that David has to pay the amount which has been claimed by Emily in full.

Can Master Arts rescind the contract with Laura?

There are two types of terms which are present in a contract. The first term is known as a condition and the second term is known as a warranty. A condition is a term of a contract on which the parties to the contract have based their will be get into a contract. These terms are the basis on which a contract has been formed between the parties. where one of the person involved in the contract have not complied with the basic terms of the contract which are the condition the other party can rescind the contact and as well as the claim damages for any loss which has taken place because of the violation of the condition. Poussard v Spiers (1876) 1 QBD 410 (Hein 2017 p 14)

On the other hand a term of the contract which does not has as much relevance like the condition of the contract is called a warranty of the contract. Warranties if violated do not provide any right to the innocent party in relation to rescinding the contract. The innocent party however has the right to claim damages for the loss which they have faced because of the non compliance with the condition of the contract. Bettini v Gye 1876 QBD 183 (Hein 2017 p 17)

The primary purpose for which damages are provided under the breach of contract have been to make the party whose rights have been violated to get back to the position where the party would be if it did not get into the contract at all. Addis v Gramophone [1909] AC 488 (McDermott 2017 p 11)

Printing the article in the first page of Newspaper was considered as a condition by the court. Associated Newspapers Ltd v Bancks – [1951] HCA 24 (Hein 2017 p 27)

It has been provided in the given situation that there has been a contract between Laura and Master Arts. In relation to the terms of the contract it is the duty of Laura to provide Master arts three sculptures a year. In the given situation in order to address the issue which has been identified above the whether the term has is a condition or a warranty has to be identified.

In the given situation the principles of Poussard v Spiers needs to be applied in order to determine what rights do Master Arts have in relation to the contact between them. Where the terms which have been identified in the given situation are the condition master arts would have the right to rescind the contract and also claim damages for injury caused to them.

On the other hand where it is a warranty which have been violated by Laura in the given situation the principles of Bettini v Gye case has to be applied. Through the application of the principles of this case it can be stated that master arts would not be entitled to rescind the contract but only claim compensation in relation to the loss which has been faced by them.

It is clear through the terms of the contract that the Master arts have considered the term according to which Laura was to provide three sculptures per year as a condition of the contract. Thus the provisions of the case of Poussard v Spiers would be applied and Master Arts would have the right to rescind the contract with Laura.

In the given situation it is the right of Laura to claim compensation for the amount of work which has been done by him as she has partially completed the contract.

Conclusion

Thus it can be concluded that Master Arts can rescind the contract with Laura.

References

Addis v Gramophone [1909] AC 488

Alan v El Nasr [1972] 2 WLR 800

Andrews, N., 2015. Contract law. Cambridge University Press.

Associated Newspapers

Ltd v Bancks – [1951] HCA 24

Austen-Baker, R., 2017. Implied terms in English contract law. Edward Elgar Publishing.

Bettini v Gye 1876 QBD 183

Foakes v Beer (1884) 9 App Cas 605

Hein, K.Ö.T.Z., 2017. European Contract Law. Oxford University Press.