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The two key sections are Sections 2 and 3. Section 2(1): a person cannot exclude or restrict liability for negligence in relation to personal injury or deathoBUT Why do companies still put in the clause? oSwimming pool if there is no guard any accident is your personal responsibility give precaution and warning oScared tactic oCark park Quiz: Zoo Section 2(2): he cannot also exclude or restrict liability for negligence in relation to other losses (such as property damage) unless the clause satisfies the requirement of reasonableness.
Section 3: essentially provides that when one party deals as a consumer or on the other’swritten standard terms 6, liability for breach of contract cannot be excluded or restricted unlessthe term satisfies the requirement of reasonableness. Section 11(1): reasonableness must be judged at the time the contract was madeand not atthe time the breach occurred. oFor instance, in a contract with the bank, it may be provided that the customer has tocheck monthly statements sent to him and report any discrepancies within seven daysand that if he fails to do so, he would not be able to sue the bank for wrongful debits.This is in effect a type of limitation clause and whether it is valid would depend on,among other things, whether the seven-day limitation period is considered reasonable.However, in determining this, the conditions at the time of the contract must be lookedatand not the conditions that arise subsequently. For instance, if it established thatseven days is generally reasonable, the fact that the particular customer in question washospitalized so that he could not reply within those seven days should not make theclause unreasonable.Section 11(5): the person who is alleging that the clause is reasonable has the burden of provingit to be such.Factorsthat are relevant in determining the issue are discussed below. Different factors may point indifferent directions and ultimately a court would have to weigh and balance them before arriving at adecision.(a)The bargaining strength of the partiesoIf the parties have equal bargaining strengths, it is likely that they could have negotiated theterms and so the exclusion or limitation clause is likely to be considered to be reasonable.oConsmat Singapore (Pte) Ltd v America National Trust and Savings Association(1992), the courtheld that the clause was reasonable for, among other reasons, both the parties in question werecommercial organisations with equality of bargaining power. oMetro (Pte) Ltd v Wormald Security (S.E.A.) Pte Ltd (1981), where the security system did notwork and goods were stolen as a result, the court held that the security company was notliable.This was because of the presence of an exclusion clause that was considered to bereasonable, as both parties were commercial organisations with equality of bargaining power. (b)Whether the customer received an inducement to agree to the term(c)Whether the customer knows or ought to know about the exemption clauseoIf the exclusion or limitation clause is common or is used often in the trade, or if the parties hada previous course of dealings in which such clauses were used, the court might be inclined to