Exemption clause cases are court cases that involve an exemption clause, in which one party attempts to avoid liability in an event of injury or breach of contract.

What Is an Exemption Clause?

In a contract, an exemption clause can limit one party's obligations or their liability if something goes wrong during the agreement. Frequently, some form of an exemption clause is included in the terms and conditions part of a product manual. The company that made the product will stipulate that they cannot be held liable in case of injury if their product is not used properly, or something along those lines.

Other exemption clauses are found in contracts between parties where one party sells something to another and tries to avoid liability if the product or service is faulty in some way. Usually the clause limits the seller's liability to only what they were originally paid for their product.

There are three types of exemption clauses:

  • Limitation clauses (also called limited liability clauses)
  • Indemnity clauses
  • Exclusion clauses

There are many cases in the history of the United States court system that surround exemption clauses. Here are four exemption clause cases.

Thornton v Shoe Lane Parking

In 1971, Mr. Thornton brought a case against Shoe Lane Parking because he was injured in their parking lot. Shoe Lane Parking was a commercial parking lot with signs that indicated cars were parked at their own risk. These signs worked as a sort of exemption clause for the owners of the parking lot to help them avoid liability should any cars be damaged in their lot.

A car wasn't damaged in this case, but a person was. Mr. Thornton was issued a ticket from a dispenser when he parked his car, and it stipulated the parking lot's terms and conditions on the back. However, the court ruled that the ticket did not accurately form a contract with Mr. Thornton because it was issued after the parking agreement was completed.

The signs were also ruled insufficient for exemption because they only covered injuries to vehicles, not people. Justice Denning ruled against Shoe Lane Parking and their attempt at an exclusion clause.

Olley v Marlborough Court Hotel

In 1949, someone stole Mrs. Olley's fur coat from her locked room at the Marlborough Court Hotel. Mrs. Olley sued the hotel for damages and the hotel's exemption clause did not hold up in court.

The hotel did try to avoid this kind of liability with signs in the rooms that said that the hotel would not be held liable for valuables that were left unattended. Because the hotel's exclusion clause was technically only stated on these signs in the rooms, and the contract between Mrs. Olley and the hotel was formed when she checked in at the reception desk, the clause was thrown out.

The court ruled that Mrs. Olley was not well-informed of the hotel's policy which made the hotel liable. If the hotel could have proven that Mrs. Olley was a regular visitor, they might have been able to argue that she was well-aware of their policy, and the exemption clause may have held up.

Curtis v Chemical Cleaning and Dyeing Co Ltd

In 1951, Ms. Curtis went to Cleaning and Dyeing Co Ltd to have her dress cleaned. She signed a contract after discussing its terms with an employee who said that it was just meant to keep the company safe from liability for damages like problems with "beads and sequins." When the dress was returned to Ms. Curtis, it was stained.

Even though the signed contract stipulated that the company couldn't be held liable for any damages done to clothing, because that information was changed verbally by the worker, the court ruled in favor of Ms. Curtis in her suit against the shop.

Parker v South Eastern Railway

In 1877, a passenger on the South Eastern Railway lost his bag and claimed that the company should be held responsible for it. The company had printed limitation clauses on their train tickets, but the court found the following:

  • A passenger needs to know about the printed clauses to be bound by them
  • A passenger cannot be bound by conditions they are not aware of
  • If a ticket is presented to a passenger in such a way that the written conditions are clearly displayed, that's enough notice to make the passenger bound by the clauses

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