Exclusion Clauses in A Level Law: Common Law, UCTA 1977 & Consumer Rights Act 2015

An exclusion clause (or exemption clause) is a contract term that tries to exclude or limit one party’s liability. Because they are so common in standard-form contracts, the law controls them carefully. In Cambridge A Level Law 9084, Control of Exemption Clauses (Topic 3.2.4) is examined in Paper 3 (Law of Contract) and combines common law rules with two statutes.

Step 1: Is the Clause Incorporated? (Common Law)

An exclusion clause only has effect if it is part of the contract.

• Signature – a signed document binds the signer, whether or not they read it (L’Estrange v Graucob (1934)), unless there was misrepresentation about its effect (Curtis v Chemical Cleaning and Dyeing Co (1951)).
• Reasonable notice – notice must be given before or at the time the contract is made (Olley v Marlborough Court Hotel (1949); Thornton v Shoe Lane Parking (1971)).
• Onerous terms – the more unusual or onerous the clause, the clearer the notice must be (“red hand rule”, Interfoto v Stiletto Visual Programmes (1988)).
• Previous course of dealing – consistent past dealings can incorporate a term (Spurling v Bradshaw (1956)), but not where dealings were few (Hollier v Rambler Motors (1972)).

Step 2: Does the Clause Cover the Loss? (Contra Proferentem)

Any ambiguity in an exclusion clause is interpreted against the party relying on it (Houghton v Trafalgar Insurance (1954)). Clear words are especially needed to exclude liability for negligence (Canada Steamship Lines v R (1952)).

Step 3: Business-to-Business Contracts – UCTA 1977

The Unfair Contract Terms Act 1977 now applies mainly to business-to-business contracts.

• s1(3) – UCTA applies to “business liability”.
• s2(1) – liability for death or personal injury caused by negligence can never be excluded.
• s2(2) – liability for other loss or damage caused by negligence can only be excluded if reasonable.
• s3 – where one party deals on the other’s written standard terms, clauses excluding liability for breach are subject to reasonableness.
• s11 – the reasonableness test: the term must be fair and reasonable given the circumstances known at the time of contracting. Relevant factors include bargaining power, insurance and whether the customer had a choice (George Mitchell v Finney Lock Seeds (1983); Watford Electronics v Sanderson (2001)).

Step 4: Trader-to-Consumer Contracts – CRA 2015

The Consumer Rights Act 2015 applies to contracts between a trader and a consumer (defined in s61).

• s31 – a trader cannot exclude or restrict the statutory rights for goods (e.g. satisfactory quality, fitness for purpose, description).
• s57 – a trader cannot exclude the statutory rights for services (reasonable care and skill), and can only limit liability to no less than the price.
• s62 – an unfair term is not binding on the consumer. A term is unfair if, contrary to good faith, it causes a significant imbalance in the parties’ rights to the consumer’s detriment.
• s65 – liability for death or personal injury from negligence cannot be excluded.
• s68 – written terms must be transparent – in plain, intelligible language and legible.

How to Answer an Exclusion Clause Problem Question

1. Identify the type of contract: business-to-business (UCTA) or trader-to-consumer (CRA).
2. Check incorporation at common law.
3. Apply contra proferentem to see whether the clause covers the loss.
4. Apply the relevant statute.
5. Reach a reasoned conclusion and evaluate where required.

Paper 3 weights AO1 and AO3 heavily, so precise case citation and evaluation of whether the law protects weaker parties are both essential. Build on the formation topics with our guides to offer and acceptance and consideration.

Free Paper 3 Past Papers – Download Now

The fastest way to lock in this topic is to practise on real Cambridge questions. Our resource hub has AS and A2 Level Law 9084 past papers for Papers 1–4, with mark schemes, free to download:

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Frequently Asked Questions

Does UCTA 1977 apply to consumer contracts?

Not any more for most purposes. Since 2015, trader-to-consumer contracts are governed by the Consumer Rights Act 2015; UCTA mainly applies to business-to-business contracts.

Can a business exclude liability for death caused by negligence?

No – this is banned by s2(1) UCTA 1977 in business contracts and s65 CRA 2015 in consumer contracts.

What is the contra proferentem rule?

Ambiguous exclusion clauses are interpreted against the party who wants to rely on them.

Final Thought

Exclusion clauses reward a fixed method: incorporation, construction, statute. Practise that structure on past paper scenarios and this topic becomes one of the most dependable in Paper 3.