Business Law

Running head: BUSINESS LAW
Business Law
Name of the Student
Name of the University
Author Note

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BUSINESS LAW
Part B
Issue 1
Whether the exclusion clause mentioned behind the receipt is valid under the common
law.
Rule
Exclusion clause is a condition incorporated in a contract that lets a party relying on it
avoid certain responsibility vested on him. It must be expressly drafted and incorporated in
the agreement for both the parties to agree and acknowledge it, thereby making it a valid
clause. The validity of an exclusion clause can be tested by way of the incorporation test
which states that a document which bears the signature of all the parties to the agreement
shall imply that the parties have the knowledge about the terms and conditions that have been
incorporated in the contract as held in L'Estrange v F Graucob Ltd1. The fact that the parties
to the agreement have a knowledge about it connotes that the exclusion clause is valid. As for
an unsigned document, it must be ensured by the party relying on such exclusion clause must
undertake every possible way to intimate the other party about the existence of such
exclusion clause. By way of the Contractual Document test it is tested and determined that
any reasonable man of ordinary prudence would have comprehended the exclusion clause and
therefore same is expected from the other party to the contract. By the help of Reasonable
Notice test it is observed that whether the other party has been given a reasonable notice
about the existence of such exclusion clause.
However, the rule of Contra Proferentem is used in case the exclusion clause has
certain ambiguity or dilemma which makes its application meaningless or unfair. In
Darlington Futures Ltd v Delco Australia Pty Ltd, the rule of Contra Proferentem was
1 L'Estrange v F Graucob Ltd [1934] 2 KB 394.

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BUSINESS LAW
applied and stated that when there is ambiguity regarding the exclusion clause, it must be
construed against the relying party2.
Application
In this section of the case, Span and Spic had provided John with a receipt which
mentioned about the exclusion clause at the back. John had no idea about such exclusion
clause that frees the drycleaner from any liability or damage that might be caused to John’s
suit. Had John known this fact, he may not have entered into the agreement with Span and
Spic. The inclusion of the clause at the back of the receipt establishes that the agreement meet
the incorporation test, even though it was an unsigned document. However, the Contractual
document test that requires any reasonable man to understand the exclusion clause and the
Reasonable Notice test requiring the other party to get a notice of the exclusion clause was
both not meet in this situation. Therefore, it can be said that John had no idea about the
exclusion clause when he entered into the contract while it was the duty of the drycleaner to
make sure that John knew and agreed to it, which they did not comply.
Conclusion
Therefore, the exclusion clause mentioned behind the receipt is void under the
common law.
Issue 2
Whether John is a consumer under the Australian Consumer Law (ACL) and the
various rights that John have as a customer under the Australian Consumer Law.
Rule
The Australian Consumer Law (ACL) strives to protect the consumers from the wrath
of the deceiving or misleading sellers and suppliers. However, it is important to establish that
2 Darlington Futures Ltd v Delco Australia Pty Ltd [1986] HCA 82.