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Exclusion Clauses

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Cool it Ltd manufactures fridge freezers and regularly uses Move it Ltd, a road haulage company, to deliver products to its network of distributors. Recently Cool it Ltd requested Move it Ltd to deliver a quantity of fridges to a distributor in Penzance. When Move it Ltd took delivery of the goods, Cool it Ltd.'s distribution manager was given a consignment note which he failed to read. On the reverse there was a statement reading:
"Whilst Move it Ltd undertake to ensure the safety of goods, they cannot accept responsibility for any loss, damage or delay arising from the transportation of said goods."

On the way to Penzance and due to carelessness on the part of Move it's driver, Move it Ltd.'s lorry was involved in an accident which resulted in substantial damage to Cool it Ltd.'s appliances. Cool it Ltd is now suing Move it Ltd for the loss arising from the damage to its appliances.

Advise Move it Ltd.

This is an example of an exclusion clause. Outline the key problems associated with exclusion clauses and explain how an exclusion clause becomes incorporated into a contract.

How do the Unfair Contract Terms Act 1977 and the Unfair Terms in Consumer Contract Regulations 1999 ensure that exclusion clauses are fair and reasonable?

Will Move It Ltd be able to rely on this exclusion clause?

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Solution Preview

The exclusion clause can negatively impact a consumer if the consumer is either unaware of the clause or if the exclusion isn't common in business practice and results in losses for the consumer as a result. Therefore, certain protections were created to protect consumers from falling prey to situations such as the one outlined in this scenario, wherein Move It Ltd egregiously put an exclusionary clause in the contract that is not fair and doesn't pass the reasonableness test. ...

Solution Summary

The key problems associated with exclusion clauses are explained. How exclusion clauses becomes incorporated into a contract are given.

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See Also This Related BrainMass Solution

Insurance Policy Provision Requiring Minimum Coverage

A policy provision that requires an insured to carry a certain minimum level of insurance covering property in order to be able to recover the full policy amount is:

a. an exclusion clause
b. an indemnity clause
c. a coinsurance clause
d. a reinsurance clause
e. a deductible clause.

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