Offer negotiation Offers or invitations to ‘treat’ Acceptance 4

Exemption Clauses – common law

Collins: freedom to allocate risks can reduce cost, but big companies can take advantage of individuals

1. Australia (mordern approach)

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  *Darlington v Delco [1986 HC]: interpretation of exclusion clause determined by:
  

1. 
   construing it according to its natural and ordinary meaning,
   

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  Selected Seeds v QBEMM: consider contract as a whole, using other clauses
  

2. 
   in the light of the contract as a whole,
   
3. 
   giving weight to the context including the nature and object
   
4. 
   construe clause contra proferentem in case of ambiguity (state regardless of application)
   

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  Broker undertook some transactions with longer exposure than authorised. Losses.
  
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  Cl 1, exemption: “Agent not responsible for any loss resulting from advise or trading on clients behalf”. Deliberately disregarded instructions to make bigger profit. Clause did not cover dealing
  
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  cl 2, limitation: “liability in connection with relationship established shall not in any event exceed one hundred dollars." Clause effective: Unauthorised action still in connection with relationship
  
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  Ailsa Craig v Malvern: less strict approach for limitations (England), but varying strictness not possible?
  

2. Secondary “rules” of interpretation (still relevant caution if involving a strained interpretation) (mention all even if only to discount)

2.1 ‘fundamental breach’

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  Karsales v. Wallis [1956] WLR: L Denning: no matter how wide the clause, it only applies when carrying out contract, not when guilty of breach going to root
  
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  Photo Production v. Securicor [1980] AC: rejected – question of construction.
  

2.2 Negligence

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  TNT v May & Baker (1966) [HC]: Delivery agreement, depot closed, kept goods at own house over night, destroyed in fire. rejected “fundamental breach”. Question of construction. The more serious a breach the less likely general words are intended to exclude it.
  
  • 
    Cl9 TNT can carry by any method. Cl 6 ‘no responsibility for any reason whatsoever’
    
  • 
    Protection of clause exists only when B is performing contract (cf darlington).
    

2.3 Serious Breach

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  Nisho Iwai v. Malaysian International Shipping (1989) [HC]: Container of prawns Malaysia –Sydney. Stolen after discharge and after placed in stack by stevedores employed by carrier. Bill of Lading clause: In effect, no liability. Cl.1 for any cause “Carrier” could not prevent by reasonable diligence, Cl.2 after delivery or when goods made available to merchant
  
  • 
    Followed Darlington: 1) could apply to non-delivery, 2) couldn't. Mere discharge was not delivery.
    
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  Antwerpen [1993] NSWCA: Container terminal allows thieves to collect whisky without bill of lading. restriction of liability in general terms wouldn’t cover deliberate breach but clear wording would?
  

2.4 Contra Proferentem (leads to courts making longer clauses just in case)

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  TNT v May: Construe ambiguities against proferens (person relying on clause)
  
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  Wallis Son & Wells v. Pratt & Haynes [1911] AC: S gives no “warranty,