EXEMPTION CLAUSE

· Normally included in the contract to avoid one party escape his liability under the contract
· Prepared by stronger party (client) – contract of adhesion “just follow, take it or leave it”. You don’t have choice but to subscribe to the contract
· Example 1: buy a house, no freedom of choice, terms has been dictate by the seller
· Example 2: parking at your own risk – law allow it based on idea ‘freedom of contract’. You r free to park or not to park there, no one force you. At the parking ticket there is always statement stated ‘management will not responsible if car stolen or loss’. Management uses the exemption clause to escape from obligation or liability
· If the exemption clause in the agreement and u sign the documents, then you are bond by the exemption clause.
· But what if clause is not in the contract, are the party signed bond? Law has involve overrules principle to regulate and control and even determine the validity of the exemption clause.
· Exemption clause rules:
1. The Rule of Notice

Principles :
· An exemption clause can only valid if it is brought to the attention of the other party before or at the time the contract is made.
· If the rule is not complying, then the exemption clause will not be valid

Case:
Olley v. Marlborough Court Hotel
- Mr and Mrs Olley register as guest of the hotel, given key of the room
- Put their belonging and go for a walk
- When returned, they found some of belonging and expensive fur coat is missing/stolen
- They brought the issue to management of the hotel to claim for damages
- Hotel management denied paying because there is an exemption clause state that the hotel is not responsible for any losses and put in a notice in a room.

Court:
- The exemption clause is not valid because the contract was made at the counter and the exemption clause is not brought up to them when they made their registration, so, they can claim damages.
- Notice came after the contract, the agreement is not valid.
- Any agreement must be brought to the attention to the party before or at the time the contract is made (to let them to make a choice whether to stay or not).

2. The ticket rules

Principle:
· An exemption clause found in or on any part of a ticket, shall not treated as valid
· A ticket is not a contractual agreement
· A ticket is not a contract, but is evidence that the contract is exceeded
· Ticket is subsequent of the contract, ticket come after contract

Case:
Parker v South Eastern Railway
Chapelton v Barry Urban District Council
· Exception of this rule if the airplane tickets because the terms in the ticket is a part of the contract

Malani Nathan v Malaysia Airline
Thornton v Shoe Lane Parking
· Thornton drove in multilevel parking space, when he press a button, the bar rise up and he drove in and park his car at second floor.
· The exemption clause was put at 3rd floor.
· Something happen to the car
· He sue the parking management
· The exemption clause should put before the entrance corner to make sure that they have the choice to park
· Shoe lane parking said there is no contract between Shoe lane parking and Thornton

Court:
A contract can make through machine


3. Contra Proferentum Rule/Rule of Interpretation

Principle:
If the exemption clause contains any ambiguity in terms of scope, extent, impact, the words used, the law would interpreted the exemption clause in favor of the weaker party and against the stronger party

Case:
Curtin v Chemical Cleaning

4. The rule of inconsistency

Principle:
· If a subsequent oral statement is inconsistent with the written term of exemption clause, then the written exemption clause will be treated as it amended by the oral statement.
· Court would interpret that inconsistency in the way that would favor the weaker party

Example/Case:
· There is notice (exemption clause stating that management will not be responsible for any damages or lost of things) at a corner of the car park.
· X noticed the exemption clause and he park his car
· X remove his valuable thing from car and at the moment wanted to lock the car, X saw Z (worker) and approach Z. Z say don’t worry that it is safe to keep the stuff in the car and nothing will happen.
· X left is belonging and when came back his belonging is missing.
· X make complain but management said they not liable because of the exemption clause

Case:
Mandelsohn v Normand
Curtis v Chemical Cleaning & Dying Company

· A lady take her cloths for dry cleaning, when received receipt she saw exemption clause and ask the girl who is on duty.
· The salesgirl said, only if the beads spoilt
· When lady came back to pick up her cloths she found that the color had changed
· Court: The exemption clause had been amended by the oral statement by the salesgirl

Court:
There is inconsistent between the oral statement made by worker and the exemption clause.
Inconsistency in the agreement, so, oral statement will be taken. X can claim damages.


5. Rule of Negligence
Principle:
· Contract can be seen from the perspective of right and duty
· Contract between A and B, A paid RM100,000 to B to built a house
· In the perspective of right:
> A has the right to received the house
> B has the right to received RM100,000

· In the perspective of duty:
> A has to pay RM100,000
> B has to built the house

· When a party has an obligation on the contract, he must discharge his obligation.
· A breach of contract is when one party unwilling or unable to perform the obligation under a contract. The other party can claim for damages
· When somebody has perform his duty then he is said to be relief from the contract

Method discharge of contract
1. By way of performance
2. By way of novation
3. By way of waiver
4. By way of rectification
5. By way of frustration