Many contractual clauses in a contract purport to exclude liability for injury, loss or damage.    Explain the general rules which will determine the effectiveness of such clauses. 

Many contractual clauses in a contract purport to exclude liability for injury, loss or damage.

Explain the general rules which will determine the effectiveness of such clauses.

ANSWER

The Effectiveness of exemption or exclusion clauses in contracts in determined by the following rules:

• The clause must be incorporated in the contract. It must be an integral part of the contract, as was the case in L‟Estrange V. Graucob. A belated notice of an exemption clause has not effect as was the case in Olley V. Malborough Court Ltd. and Lougher V.Kenya Lodges and Hotels Ltd.
• If the clause is ambigious, uncertain or vague, it is interpreted contra proferentes, i.e. restrictively against the party relying on it. This rule of construction is referred to as Contra Proferentm.
• A person can only take advantage of an exemption clause in contract, if it is privy to the contract, i.e. has provided consideration. In Halal Shipping Co. V. Securities BremeAllegementine it was held that the defendant could not rely on the exemption clause as it was not party to the contract.
• An exemption clause cannot be given effect if to do is a fundamental breach or nables a party escape its fundamental obligation as was the case in Karsales (Harrow) Ltd. V.Wallis.
• If contractual terms are written, the exemption clause must be part of the written terms and if a party signs the document, it is bound by its terms. This is because signature Prima facie means acceptance.
• If contractual terms are contained in a document, the document itself must have been part and parcel of the contract.