BLAW1004 Lecture Notes - Lecture 5: City Of Sydney, Contra Proferentem, All England Law Reports
12 Jun 2018
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Lecture 5: Exclusion Clauses and Implied Terms
Terms that exclude liability:
• Operate exclusively to the benefit of only one party
• Exclude all liability for breach;
• Limit liability for breach of contract or other wrongful conduct;
• Exempt a party from the obligation to perform as promised
• Limit the redress available to the other party where there is a failure to perform
(usually by specifying a limit to the amount of damages available).
Examples of terms that exclude liability:
• A bus company restricts liability for injury to passengers;
• A dry-cleaner excludes liability for damage to clothing
• An insurance company excludes liability for death arising from dangerous sports;
and
• A manufacturer excluding liability for defective products.
For a term excluding liability to be given legal effect it must:
• Clear and precise in its wording and the aspects of liability that are being excluded
or limited
• Properly brought to the attention of the other party prior to them entering the
agreement
• Note: A course of prior dealing would be relevant in determining whether a term
excluding liability has been brought to the attention of the other party.
Exclusion causes ambiguoty:
• Where the meaning of an exclusion clause is ambiguous, the court will interpret the
exclusion clause against the interests of the party who is seeking to rely on it (contra
proferentem).
• An exclusion clause can be interpreted against the interests of the preferred party
by:
- Interpreting ambiguous words narrowly
- Not giving the clause scope to apply to events which fall outside the four
corners of the contract.
Cases:
• Olley v Marlborough Court Ltd [1949] 1 All ER 304
- Couple booked into hotel room and furs and jewellery were stolen
- Couple wanted compensation
- Hotel denied liability, because of exclusion clause detailed on a sign on the
back of room door – The hotel would not be responsible for articles lost or
stolen
- Had the exclusion clause behind the door been incorporated into the contract
between the couple and the hotel?
- No. It was only brought to the attention of the couple after they had checked
in. For the clause to be effective, it needed to be brought to their attention at
that time when the contract was formed.
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• Sydney City Council v West (1965) 114 CLR 481
- West parked car in Sydney council car park, obtaining a ticket from machine
at entrance and car was gone when he returned.
- Third party had approached parking attendant claiming to have lost ticket.
- Attendant provided duplicate without checking. Third party then proceeded
to take car
- West sued Council for damages.
- Council denied liability on the basis of express statement on ticket – The
Council does not accept any responsibility for the loss or damage to any
vehicle
- The statement on the ticket did not effectively exclude liability in these
circumstances. The exclusion clause had become a term of the contract, but
properly interpreted it did not apply to this situation because attendant
allowed unauthorised delivery of the car.
Implied terms:
• Not expressed but intended to be part of the contract
• The courts do not easily recognise such terms as they dont want to be seen to
interfere with the contract between the parties
Terms implied by fact:
• For a term to be implied by fact it must be obvious from the circumstances that the
parties must have intended to include such a term
• The officious bystander test applied by court: What would the parties have
replied if an officious bystander had asked them at the time of their agreement
whether the suggested term was part of their contract?
• If answer is of course, the necessary intention is established.
• The courts are willing to imply terms in fact to give a contract commercial meaning.
Without this, the contract is hard to give effect to.
• For this to occur, there must be gaps in the terms that have been expressly agreed
by the parties.
Cases:
• Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337
- Codelfa was hired to do work for State Rail Authority
- The work was authorised City and Suburban Electric Railways (Amendment) Act
1967 (NSW) which protected Codelfa from injunctions due to nuisance.
- The contract said Codelfa is not entitled to recover damages for delays
caused by events beyond the control, as long as notice and explanation is
provided.
- The contract was made on the basis that the Codelfa was going to be able to
work a certain amounts of shifts pair week, as it was immune to injunctions
- However, an injunction was issued. The Codelfa was forced to greatly
reduce number of shifts (causing a delay) and incur extra costs
- Decision was the court was reluctant to base this decision on an implied
term because of the following;
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Document Summary
Cases: olley v marlborough court ltd [1949] 1 all er 304. Not giving the clause scope to apply to events which fall outside the (cid:494)four corners(cid:495) of the contract. back of room door (cid:494)the hotel would not be responsible for articles lost or. Couple booked into hotel room and furs and jewellery were stolen. Hotel denied liability, because of exclusion clause detailed on a sign on the. It was only brought to the attention of the couple after they had checked in. For the clause to be effective, it needed to be brought to their attention at that time when the contract was formed: sydney city council v west (1965) 114 clr 481. West parked car in sydney council car park, obtaining a ticket from machine at entrance and car was gone when he returned. Third party had approached parking attendant claiming to have lost ticket. Council does not accept any responsibility for the loss or damage to any.
