An imploded Titan Sub and a signed contract. Who is at fault? Here, Litigation Partner at Beyond Corporate, Alistair Gregory looks at signed disclaimers and how far an exclusion clause can go.

We all watched closely the search for the missing titanic submarine which ended in heartbreak, with tributes for the dead and praise and admiration for those staging the rescue, coming from all around the world. As this tragic event settles in minds, attention turns to who, if anyone, is at fault.

Various theories have been canvassed but one issue that stands out is that the passengers of the vessel apparently signed a disclaimer. We do not know the details of any such disclaimer, but it does raise an interesting point as to what the laws in England and Wales say in terms of excluding liability.

It is possible for parties entering into a contract to have what is called an exclusion clause which means that one party will not be liable to another in certain situations, usually where a breach has occurred. How far that exclusion clause can extend has been a matter of much debate over many years but in outline, the key points are set out below.

Is it legal?

The exclusion clause has to be ‘legal’ so if the clause is illegal, it will automatically be unenforceable. For example…

Under the legislation governing unfair contract terms, death or personal injury caused by negligence cannot be restricted or excluded but an exclusion clause can however exclude or restrict liability due to negligence.

Consumer rights legislation prevents exclusion clauses which exclude liability to a customer for injuries caused by negligence.

That consumer protection is also underpinned by further legislation which says that the exclusion clause will be deemed unfair if it ‘causes a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer’

How Specific is the clause?

The party relying on the exclusion clause must be very specific, if not, the Court tends to interpret the clause in favour of the other contracting party.

Where is the exclusion clause?

The exclusion clause must be incorporated into the contract. That is simple if it is included in a signed contract but less so where you have to show you have given reasonable notice and reasonable steps have been taken to bring the clause to the attention of the other party, importantly before the contract begins. It could be argued that the clause has been incorporated by way of previous trading but that might leave some doubt.

Generally speaking you will hear advice, especially in the field of extreme sports or pursuits that exclusion clauses and disclaimers are not worth the paper they are written on, and that may be right but that is only limited to the laws of England and Wales. The position may well be very different for disclaimers signed in say the USA and that would depend upon on the laws in the different states.

Careful drafting is needed when it comes to exclusion clauses and Courts tend to have a more favourable view of contract terms which limit liability rather than remove all responsibility. Should you require any help enforcing, resisting or drafting contract terms do not hesitate to get in touch.

If you have any questions or require any further advice on this topic, get in touch with our specialist teams today at hello@beyondcorporate.co.uk

[This blog is intended to give general information only and is not intended to apply to specific circumstances. The contents of this blog should not be regarded as legal advice and should not be relied upon as such. Readers are advised to seek specific legal advice.]