Lecture 6 Exclusion Clauses and Integration Clauses

Exclusion Clauses Exclude (exclusion clause) or limit (limitation clause) liability: that is, they provide a defence for possible actions for breach of contract.

Common Law Primary Rule of Construction: The clause is to be given its natural and ordinary meaning, read in light of the contract as a whole. If there is ambiguity, the clause should then be construed contra proferentem: that is, against the party for whose benefit it has been included. From Darlington Futures v Delco.

Secondary Rules contra proferentem seriousness of breach fundamental breach breach of fundamental term wilful breach four corners rule negligence deviation

Four Corners Rule Per Scrutton LJ in Gibaud v Great Eastern Railway Co [1921] 2 KB 426 at 435: ‘…if you undertake to do a thing in a certain way … with certain conditions … and have broken the contract by not doing the thing contracted for in the way contracted for … you cannot rely on the conditions which were only intended to protect you if you carried out the contract in the way in which you had contracted to do it.’

Example of Integration Clause “ 18.9 This Agreement is executed and delivered with the understanding that it and any Security embody the entire agreement between the parties with respect to the subject matter hereof, that it cancels and supersedes all previous agreements, negotiations, comments and writings in respect thereof, that there are no prior representations, warranties or agreements relating thereto and that it prevails over any inconsistent terms and conditions contained or referred to in any purchase order or other instrument that may at any time arise between or be given by either party in respect of the subject matter. The acknowledgment or acceptance of a purchase order or other such instrument containing conditions at variance with those of this Agreement shall not be inferred as modifying this Agreement.” From: Johnson Matthey v AC Rochester