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Exemption Clauses: Incorporation

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Exemption Clauses: Incorporation

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  • exemption clause: limit or exclude liability / a defence to breach / alternate view: define obligations (Coote)
  • common law rules / incorporation: part of contract / construction: covers breach

Nature of documentation

  • must be contractual / objective test: whether reasonable person would assume document contained terms & conditions
  • deckchair / ticket not contractual / exemption clause not incorporated (Chapelton v Barry Urban District Council [1940])
  • timesheet / administrative / record performance contractual obligations / not contractual (Grogan v Robin Meredith Plant Hire [1996])

Incorporation by signature

  • exemption clause may be incorporated by signature / only innocent party signature required
  • cigarette machine / irrelevant if read / incorporated (L'Estrange v Graucob Ltd [1934])
  • exception: not bound by signature / fraud or misrepresentation / not contractual document / clause not legible
  • dry cleaner / verbally misrepresented clause / not incorporated (Curtis v Chemical Cleaning & Dyeing Co. [1951])
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Exemption Clauses: Incorporation

[Flash Card 2 of 3]

Reasonable steps

  • if no signature / innocent party must have: known clause existed / party relying on clause taken reasonable steps to bring to other's notice
  • luggage / ticket / sufficient if taken reasonable steps (Parker v South Eastern Railway (1877))
  • reasonable steps: position on document / prominence / onerous or unusual / if exemption clause expected: may be sufficient to hand over document / refer to standard terms & conditions

Onerous or unusual clause

  • Lord Denning: ..The more unreasonable a clause is, the greater the notice which must be given of it. Some clauses would need to be printed in red ink with a red hand pointing to it before the notice could be held to be sufficient... (Spurling v Bradshaw [1956])
  • car park / unusual exclude personal injury / sign inside insufficient notice (Thornton v Shoe Lane Parking Ltd [1971] )
  • photo library / high holding fee / did not highlight onerous clause / not incorporated (Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd [1989])
  • Hobhouse LJ (dissenting CoA):greater steps incorporate onerous clause creates uncertainty / unreasonable clauses covered by UCTA 1977 / should be same test regardless of nature of clause (AEG (UK) Ltd v Logic Resources Ltd [1996])


  • general rule: party seeking rely on clause / take reasonable steps / before contract finalised
  • fur coat hotel / sign inside room / after contract not incorporated (Olley v Marlborough Court Ltd [1949])
  • car park / sign inside / not incorporated no sufficient notice before contract / Sir Gordon Wilmer: distinction ticket from machine & person / from machine irrevocable (Thornton v Shoe Lane Parking Ltd [1971])
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Exemption Clauses: Incorporation

[Flash Card 3 of 3]

Previous consistent course of dealing

  • previous dealings : irrelevant if reasonable steps taken before contract formed /relevant & exemption clause may be incorporated if reasonable steps taken after contract finalised
  • animal feed / 3 purchases per month for 3 yrs / sale note included exemption clauses / consistent course of dealings between parties / exemption clauses incorporated (Kendall (Henry) & Sons v Lillico & Sons [1969])
  • must be sufficient regular dealings / amounting to course of dealings
  • car fire damage / invoice included exemption clause / P used garage 4 times in 5 yrs / insufficient / exemption not incorporated (Hollier v Rambler Motors [1972])
  • course of dealings must be consistent
  • car damaged on ferry / used service regularly / usually P signed consent form including exemption clauses / but not this occasion / inconsistent whether document signed / not incorporated (McCutcheon v MacBrayne Ltd [1964])
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