Exclusion Clause in Service Contracts - Coursework Example

Exclusion Clause in Service Contracts – Whether One party to a contract can restrict their liability by adding negligence by it will be excluded fromthe future liability – An Analysis Word Count-1539 excluding List of References Introduction “The Supply of Goods and Services Act 1982 (SGSA)” covers all contracts involving the supply of services. S 13 of the Act deal with the benchmark of execution of services, s 14 concerns with the period within which the performance has to be mad and s 15 ,the consideration or price for such services. This Act is applicable to all service contracts either independent or along with the supply of goods. Some of the examples of service contracts are providing accounting services , provision of health care , provision of legal services,etc.(Bradgate & White 2007 :211). A service provider who deals with his customer cannot enforce his own printed standard terms of conditions thereby cannot either restrict or exclude his accountability for infringement of contract or offer an incomplete service for which he has to demonstrate that exclusion clause is in line with “ test of fairness or reasonableness.” If he has not taken any reasonable skill or exercise reasonable care, he will be held liable under “negligence” under the common or contractual law. The act of negligence engrosses any infringement under common law or any contractual duty to exercise reasonable skill or to show reasonable care. This study will analyse whether by including an exclusion clause in a service contract, a party to contract can avoid the liability for any loss caused by the negligence. Exclusion Clause and Negligence In UK, service contracts do contain limitation or exclusion clauses. Sometimes, these limitation clauses are upheld in the case law. As regards to exclusion clauses pertaining to liability in a contract and in tort are normally valid only if they are rational which connotes in consideration with both contracting parties at the juncture of contract is made as per the Unfair Contract Terms Act 1977. An exclusion clause is like a double -edged sword since it will be construed against the party who relies on it as held in Curtis v.Chemical Cleaning Co. 1 (Barendrecht 2007 :685). A service contract may contain an exclusion clause thereby one party wants to restrict his accountability for his negligence or infringement of contract. Moreover, such clause can be relied by a party only if it has been included in the said contract, and for the purpose of elucidation, it is applicable to the loss in the question. Its validity will then be interpreted under the “Unfair Terms in Consumer Contracts Regulations 1999” and under the “Unfair Contract Terms Act 1977.” It is to be observed that the above laws are introduced in UK on the basis ofEU Unfair Consumer Contract Terms Directive. (Lawson 2011:57). A party desirous to trust on the exclusion clause must demonstrate that it is part and parcel of the contract. Through by a notice or by signature or through the process of dealing, an exclusion clause can be inserted in the contract. For exclusion of any liability for negligence, there should be clear words in a contract as held in White v John Warwick2. (Taylor & Taylor: 136). A service supplier is accountable under the statute only for not taking rational care in the provision of service. In normal parlance, there exists no implicit responsibility to accomplish any given outcome by a supplier of service and if a buyer wishes to have such undertaking, it should be provided in the service contract as an express term. (Bradgate & White2007:212). Under s2 (2) of the Unfair Contract Terms Act 1977¸accountability for any other variety of damage or loss can be kept out provided the notice or term fulfils the prerequisite of reasonableness. A service provider cannot control or exclude his accountability in negligence for loss originating from defects in services provided for either consumption or for private use by means of notice or term included in a guarantee. In an action of negligence, the burden of proof is on the party who grumbles of negligence. The claimant should demonstrate that he suffered an injury by an omission or act for which the defendant is accountable. There should be some evidence of some obligation owed by the defendant, infringement of such duty and resultant injury suffered by the claimant. Moreover, the omission or act should be the proximate reason of damage to the claimant. (Singh2010:145). In Arthur JS Hall & Co v Simons3, if there is negligence in providing service to their customers by barristers, no immunity is available to them from exclusion clauses in the contract. The House of Lords held that there was no necessity care for barristers divergently from other professionals and their professional negligence could drag them to be liable under tort. (Elliot & Quinn 2010:201). Professionals like lawyers should have a standard of care while providing services to their clients. If any deficiency of services by professional like lawyer may end in grave injury or loss to his client, and the nature of professional service rendered by a professional will be gauged by the norms of those who have same set of abilities and skills. In Bolam V Friern Hospital4 , Justice McNair held that doctors are needed to function in a style labelled proper and reasonable by a set of other conscientious doctors. (Jones: 600). Applying the same principle, the lawyers should provide their service with reasonable care. In Ross v Caunters5 , both clients and third parties are entitled to have a duty of care from a lawyer. Both in Caparo Industries Plc v Dickman 6and in White v Jones7, it was held that professional should exhibit reasonable care while providing services to others. In Hedley Byrne & Co Ltd v Heller & Partners Ltd, if a professional with a special skill will owe a duty of care to another person who banks on such skill. In Purves v Landell, it was held that a barrister is not liable for professional negligence, since he is a lawyer of a solicitor whereas a solicitor is liable for professional negligence. (Niles 1963:86). Exclusion clause in standard forms of service contracts is often widely abused and an exemplifying illustration is to avoid any liability to clients for any injury, loss, damage and in most cases, courts have declined to enforce such irrational exemption clauses if they are not properly brought to the notice of the clients at the time of execution of contract. Hence, if an exemption clause is so destructive of the client’s rights and it would be normally construed narrowly by the judges against the party trying to implement them. This is known as ‘contra proferentem’ rule in English law. (Jones, Benson & Benson 2006:280). Solicitors advising their clients in the course of their professional duty have been needed to adhere to high norms of professional conduct and to adhere to the well -settled norms of professional conduct. If they disregard their professional norms, then it would be construed as either unprofessional conduct or professional misconduct. Professional misconduct will arise where a solicitor involves in a demeanour which is morally guilty in a sense of having some criminal feature as held in Re Weare8. The moot question is whether or not the demeanour of the solicitor is such as to order the solicitor’s disqualification to be an officer of court as held in Re Strong9 and in R v Southerton10. For example, if it is demonstrated that a solicitor has done during the pursuit of his profession something which would be considered as dishonourable or disgraceful by professional associates of good reputation, in such cases, a solicitor may be found to be guilty of professional misconduct as held in Re A Solicitor11. If it is sufficiently serious, on rare occasion, professional negligence may be regarded as misconduct as held in Re A Solicitor12. (Christensen, Duncan & Walsh 2004:176). Conclusion In Arthur JS Hall & Co v Simons13, if there is negligence in providing service to their customers by barristers, no immunity is available to them from exclusion clauses in the contract. In Hedley Byrne & Co Ltd v Heller & Partners Ltd, if a professional with a special skill will owe a duty of care to another person who banks on such skill, courts have declined to enforce such irrational exemption clauses if they are not properly brought to the notice of the clients at the time of execution of contract. Hence, if an exemption clause is so destructive of the client’s rights and it would be normally construed narrowly by the judges against the party trying to implement them. Applying the above, Schatz Legal Services cannot escape from its liability by including an exclusion clause to limit their liability for any loss caused by the negligence of its Management or Staff to "A-Z Financial Services Ltd". List of References Barendrecht J M. (2007). Service Contracts :( PEL SC). London: Seller European Law Publishing. Bradgate R& White F. (2007).Commercial Law. Oxford: Oxford University Press Christensen S, Duncan WD & Walsh T. (2004). Professional Liability and Property Transactions. London: Federation Press Elliot C and Quinn F. (2010).Contract Law, 7th edition. London: Pearson Longman. Jones H, Benson C & Benson C. (2006). Publishing Law. London: Taylor & Francis. Jones R. (2004). Oxford Textbook of Primary Medical Care, Volume 1. Oxford: Oxford University Press. Lawson R (2011). Exclusion Clauses and Unfair Contract Terms. London: Sweet & Maxwell. Niles, R D. (1963). ‘Ethical Prerequisites to Certification of Special Proficiency.’ ABA Journal, Vol.49, 83. Singh S P. (2010). Law of Tort: Including Compensation Under the Consumer Protection Act. New Delhi: Universal Law Publishing. Taylor R & Taylor D (2007). Contract Law Directors. Oxford: Oxford University Press. Read More