Business Law: Exclusion Clause, Negligence, and Restrictive Covenant

This article discusses the principles of exclusion clause, negligence, and restrictive covenant in business law. It covers relevant cases and their applications.

Running head: BUINESS LAW
QUESTION & ANSWER
Name of the student:
Name of the university:
Author note

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Table of Contents
QUESTION 1.............................................................................................................................2
Issue:.......................................................................................................................................2
Rule:.......................................................................................................................................2
Application:............................................................................................................................3
Conclusion:.............................................................................................................................3
QUESTION 2.............................................................................................................................3
Issue:.......................................................................................................................................3
Rule:.......................................................................................................................................3
Application:............................................................................................................................4
Conclusion:.............................................................................................................................5
QUESTION 3.............................................................................................................................5
Issue:.......................................................................................................................................5
Rules:......................................................................................................................................5
Application:............................................................................................................................6
Conclusion:.............................................................................................................................6
Reference:..................................................................................................................................7

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QUESTION 1
Issue:
The main issue of this case is to determine whether Henri can hold the hotel liable
for the loss of his property or not.
Rule:
The subject matter of this case is based on the principle and exception of exclusion
rule under the contract law. According to the common law, the parties to a contract have
certain rights against each other. An exclusion clause helps to restrict certain rights of the
parties (Jones, 2016). However, there are certain rules specified in this case. According to
this, there are three elements for the application of this clause such as the clause has been
incorporated in the contract, the provisions of the clause was clear and the contracting party
has knowledge of it and none of the clause is adhered to the Unfair Contract Terms Act.
According to the common rule of contract, if any party make any breach regarding
the contractual obligation, the other party may bring action against him (McKendrick, 2014).
However, if any misrepresentation has been done by one party, the exclusion clause will not
apply. It has been observed in Curtis V Chemical Cleaning Co [1951] 1 KB 805 that the
party against whom exclusion clause has been bought must have certain knowledge about the
contractual terms and the other party is under the obligation to clarify the provision of the
terms. However, no action can be bought if the party has no knowledge regarding the same.
Further, in Thornton v Shoe Lane Parking Ltd. (1971) 1 All ER 686, it has been held that
until the party to a contract does not serve notice regarding the contractual terms and clarify
the same, the said term could not be included under the contract. Therefore, under the

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exclusion clause, the authority should have to clarify to all the parties regarding the terms and
conditions of the exclusion clause; otherwise such plea could not be accepted.
Application:
In this case, it has been observed that Henry was staying at a hotel and in his room
there were many signs. According to the hotel authority, there is a sign that reads that the
hotel authority will not be liable if any valuable things of the customer misplaced. However,
no steps have been taken by the hotel authority to bring this term in the notice of Henri. It has
been observed that some belongings of Henri have been lost and on asking about that, the
hotel authority has mentioned about the exclusion clause. According to the settled rule of
exclusion clause, the term has not been incorporated in the contract. Further, the terms are
unfair and against the law, as the hotel authority should be careful for the security of the
customers and in this case, the alleged hotel has failed to take such action.
Conclusion:
Therefore, it can be stated that exclusion clause will not be applied here and Henri
can hold the hotel liable for the loss of his property.
QUESTION 2
Issue:
The main issue of this case is to determine whether Henri can hold the hotel liable
for his head injury or not.
Rule:
The main subject matter of the case is based on the rules of negligence and
contributory negligence. According to the common rule of law, every person has an

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obligation to act with due care and diligence. However, in case they have failed to act
prudently, his action will be regarded as negligence. Under the Law of Torts, it has been
mentioned that if any harm has been incurred by the party due to the carelessness of others,
the affected party may bring action for the harm against the other party (Patten & Saunders,
2018). Considering the formation of negligence, it can be stated that there are three elements
of negligence such as duty of care, breach made against such duty and causation. It is the
legal liability of a person to take necessary care of others with the purpose to avoid any harm.
If any person has failed to take necessary care, he may face legal penalties. This principle of
duty of care has been established in the historical case of Donoghue v Stevenson [1932] AC
532. Further, in Grant v Australian Knitting Mills (1935) UKPC 62, it has been stated that
the harm should be reasonably foreseeable and they should be fair and just.
However, there are certain exceptions to the common rule of negligence.
According to this, if any harm has been caused to a person who has the knowledge that such
action can caused injury to him and he has done the action with this knowledge, he will
partially be held liable for the negligence (Goudkamp, 2017). This principle has been
established in Butterfield v Forrester [1809].
Application:
In this case, it has been found that after using the washroom, Henry found him
locked down and the door had not been opened after many tries. This is the duty of the hotel
authority to keep close vigil over these issues and they have failed to take proper care.
However, Henry is capable enough to understand that any action done by him at that stage
could lead to the injury and having such knowledge; he had done the act and sustained injury.
Therefore, he has certain contributions in the injury.

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Conclusion:
Therefore, it can be stated that Henry could not held the hotel fully liable for the
injury sustained by him.
QUESTION 3
Issue:
The main issue of the case is to determine whether Henry can prevent Donald’s
company for competing him directly or not.
Rules:
The main subject matter of the case is based on the principle of restrictive covenant
and duty of fidelity under the employment contract. According to the principle of restrictive
covenant, there is certain information in a company that is required to be confidential and no
one is allowed to pass that information even after terminated from the job (Bishara, Martin &
Thomas, 2015). Further, before appoint an employee; an employment contract has been made
between the employer and the employee. It is the duty of the employee to act according to the
rules of that contract. Further, the employee has a duty of fidelity to act according to the
terms of the contract and maintain that after the completion of his job. According to the
principle of duty of fidelity, an employee should act in good faith and fidelity (Flannigan,
2016). Duty of fidelity is different from the fiduciary duty. In case of fidelity, an employee
has to work for securing the employer’s interest. However, in Trident Pharm Pte Ltd v Yong
Pei Pei Tracey and another [2014] SGHC 59, it has been observed that if the employee is
not appointed by the plaintiff (employer) directly and no such contract has been made
between them, the principle will not apply on them. Duty not to compete, duty of

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confidentiality and duty not to use the confidential information of the employer are some
instances of duty of fidelity. Therefore, if in an employment contract, it has been mentioned
that an employee could not compete the employer even after terminated from the job and the
employee has given his consent over the same, he is restricted to profess any similar business
in future.
Application:
In this case, it has been observed that Donald was working as the Marketing
Director for Henry’s company and in the employment contract, it has been mentioned that
Donald could not compete Henry even after the completion of his job. Therefore, the
principle of restrictive covenant will apply on it. Further, it is the duty of the employee to act
in good faith and maintain the terms of the employment contract he has entered into. The
employee could not bring the claim of separate entity of the company, as he has expressed his
consent for not to profess any similar kind of business. Failure to maintain such liability will
lead to legal action against such employee.
Conclusion:
Therefore, it can be concluded with the view that Donald should have to maintain
all the clauses of the employment contract and he should not required to make any breach
regarding the same. In this case, Henry can take legal action against Donald if he tries to
compete his business.

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Reference:
Bishara, N. D., Martin, K. J., & Thomas, R. S. (2015). An empirical analysis of
noncompetition clauses and other restrictive postemployment covenants. Vand. L.
Rev., 68, 1.
Butterfield v Forrester [1809].
Curtis V Chemical Cleaning Co [1951] 1 KB 805
Donoghue v Stevenson [1932] AC 532.
Flannigan, R. (2016). Constructing an Employee Duty of Fidelity?.
Frazer, A. (2015). The employee's contractual duty of fidelity.
Goudkamp, J. (2017). The contributory negligence doctrine: four commercial law problems.
Grant v Australian Knitting Mills (1935) UKPC 62
Jones, E. (2016). Exclusion Clauses.
McKendrick, E. (2014). Contract law: text, cases, and materials. Oxford University Press
(UK).
Patten, B., & Saunders, H. (2018). Professional negligence in construction. Routledge.
Thornton v Shoe Lane Parking Ltd. (1971) 1 All ER 686
Trident Pharm Pte Ltd v Yong Pei Pei Tracey and another [2014] SGHC 59