Question

Shirley bought a brand new car from Leyland Motors. The contract of sale contains the following exclusion clause: “Leyland Motors does not make any guarantees whatsoever as to the quality or fitness of this car. The buyer purchases at their own risk.” It turned out that what Shirley bought was not a brand new car, but a slightly used demonstrator model. Now she wants to get out of her contract with Leyland Motors. Shirley argues that Leyland Motors breached their contract by selling her a used car. Leyland Motors on the other hand argues that the exclusion clause in the contract excuses it from all liability. Who is correct? business law

Answer 1

Answer:-

An exclusion claise is a term in a contract which seeks to exclude or limit the liability of one of its parties. Traditionally, the district courts have sought to limit the operation of exclusion clauses.

The courts have traditionally held that exclusion clauses only operate if they are actually part of contract. There seem to be three methods of incorporation:

1) Incorporation by signature: if the clause is written on a document which has been signed by all the parties, then it is part of the contract.

2) Incorporation by notice: is taht an exclusion clause will have been incorporated into the contract if the person relying on it took reasonable steps to draw it to the other parties attention.

3) Incorporation by previous course of dealings: according to the terms may be incorporated into a contract if course of dealing between the parties were " regular and consistent".

For Example- it may state taht a party has no liability if the cintract is breached or alternatively, seek to limit the range of remedies available or the time in which they can be claimed.

In the present case Leyland Motors is correct because the exclusion clause is already mentioned in the contract which excuses it from all liability.