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( Olley v. Marlborough Court, Ltd [1949]; Hollier v Rambler Motors (AMC) Ltd
[1972]; Thornton v Shoe Lane Parking Ltd [1971]).
Interpretation of Exemption Clauses
To give effect to the manifest intention of the parties, common law has evolved a variety of
rules for interpreting the meaning of exemption clauses.
• " Contra proferentem " – an exclusion clause will be construed strictly against the
person who inserted it ( Hollier v Rambler Motors (AMC) Ltd [1972]).
• Negligence – if a party wishes to exclude liability for negligence in the performance
of his contract, he must use very clear words. Any looseness or ambiguity will cause
the term to be rejected as in Hollier v Rambler Motors (AMC) Ltd [1972].
• Particular Duties – if a clause exempts a party from complying with specific duties
or matters, then all other duties or matters will remain in full force.
• General Words – the wording used must be clear, precise, and unambiguous,
otherwise it will be ineffective.
Summary
There has always been a misconception that a contract should always be in writing. This
Unit has shown you that a contract can be in any form. A contract can be oral, it can be in
writing, it can be implied, or it can evolve from a combination of these. Remember that the
parties are at liberty to agree on whatever terms they want. This Unit has also shown you
that it is possible to limit liability in a con tract through the inclusion of “exclusion clauses”.
However, remember that for the “exclusion clauses” to be valid they must be brought into
the contract before or at the time of making the contract. Any clause introduced after the
contract is already formed will be invalid. Remember also that the party wishing to rely on
Activity 1 c:
Are exclusion clauses valid terms of a contract?

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the exclusion clause must take all reasonable steps to bring the exclusion clause to the
attention of the other party.
Unit 6 will explore further aspects of contract. Not everyone one can enter into contracts.
Some persons have no or limited capacity to do so. Unit 6 will therefore discuss capacity to
enter into contracts.
Further Reading
1.
2. Elliott, C. and Quinn, F. (2009a) Contract Law. 7th edn. England: Pearson Education
Limited.
3. ABE (2008) Principles of Business Law. London. UK: The Association of Business
Executives.
4. Riches, S. and Alle n, V. (2009) Keenan and Riches’ Business Law. 9th edn. England:
Pearson Education Limited.
Unit Test
1. What are exclusion clauses?
2. Using at least two relevant cases for each, briefly discuss “warranty, condition and
innominate” terms of contract.
3. Discuss Hollier v Rambler Motors (AMC) Ltd [1972].
Answers to Unit Activities
Activity 5a:
Yes. A contract can be in any form. See Section 5.1
Activity 5b:
The classification is significant as remedies for breach of contract depend on the type of term
affected. A “condition” goes to the root of the contract such that failure to perform it entitles
the affected party to rescind the contract (Bettini v Gye 1876). On the other hand a
“warrant y ” is a subsidiary term to a contract. If broken, the contract will still go on and the
party affected may only claim compensation (Poussard v Spiers 1876)