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Contract may not be fair but you can't use it to avoid liability

Having explored the juridical destination of the juvenile defence of 'they made me do it' (AJ 12.4.01) recent events have caused me to look at how the law deals with another well-known childish protestation, that 'it's not fair'. Of course, children who complain about inequality in life are usually absolutely right to do so: their negotiation skills may be improving but their bargaining position is still somewhat under- powered. That is why the beleaguered parent has no alternative but to explain that, well, basically, that's life. But large, commercially-motivated, corporate concerns are free to enter into any arrangement they please, or so the courts assume, and that is why a judicial eyebrow is usually raised when squabbling parties come running to courts to try to undo their bargain on the basis that 'it's not fair'.

Nowhere is this argument more frequently raised or fiercely fought over than when someone tries to wriggle out of liability by relying upon an exclusion clause buried deep in the small print. It is extraordinary that grown up companies regularly do business on terms and conditions of which they are, usually, oblivious, and which are, nearly always, impossible to read. If support were needed for the proposition that most disputing parties believe that the terms 'printed overleaf ' on the order are completely irrelevant to the real business of the day, it can be gained from the following facts:

no one ever bothers to photocopy them for me, even when they want me to tell them what their contract means;

even if they did, the pale silver grey of the minuscule type face would defeat even the most sophisticated of photocopiers; and they may be able to rustle up the current edition of their terms and conditions if pressed, but they seldom keep previous versions applicable to earlier contracts which have now gone wrong.

Ultimately the perceived injustice is not so much that someone should try to wriggle out of liability, but that they should have the audacity to rely upon the small print in the first place.

So how do the courts deal with a dispute between the would-be wriggler-out-of-liability and the indignant crier of 'it's not fair'?

The starting point is that parties are free to agree whatever terms and conditions they like.

So, if one party has an outrageous provision to the effect that 'we might do what you've asked us to, but don't rely upon us getting it right, and if its wrong don't blame us', and the other side agree to it, then they have only themselves to blame if it ends in tears. When looking at the wrigglers'exemption clauses, the courts set out a few playground rules, or 'canons of construction':

exemption clauses must be expressed clearly and without ambiguity or they will be ineffective;

they should not be inconsistent with the main purpose of the contract. The courts are reluctant to support attempts to absolve the wriggler from all duties and liabilities;

wrigglers have to show that their clause applies to the particular case and if there is any doubt it is construed against them.

the wording of each clause must apply exactly to the particular case. So the smirking wrigglers who thought they could rely upon a clause to the effect that they would not be liable for any 'consequential loss or damage' found that they had reckoned without the two limbs of the law of damages. These define damages as, firstly, those losses flowing naturally from the breach and, secondly, those within the contemplation of the parties at the time of the contract. The smile was wiped off the wrigglers' faces when the courts, in cases such as Croudace Construction Ltd v Cawood Concrete Products Ltd (1997) and Deepak v Davey (1999) said that the exclusion of liability for 'consequential loss' would only cover the second of these limbs and that they were still liable for the bulk of the claimants' losses.

The wrigglers' attempts to avoid liability were not so much 'not fair' as 'not so clever' after all.

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