Legal Issues and Exclusion Clauses in Contract Law

LAW
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Question 1
Issue
The issue is to determine if any representations made by Effah with regards to MowMaster
3000 are terms of the contract or not. In this regard, it is imperative to segregate puffery from
the representations and also outline the various aspects to determine when a representation
can be considered a term.
Rule/Law
A representation is a statement of fact which is made in the pre-contractual negotiations by
the seller to communicate relevant information to the buyer about the underlying product or
service on sale. It is imperative to segregate this from puffery which unlike representation are
mere opinions and therefore not factual in nature. With regards to representations, there are
some which are considered as terms of the contract. The identification of such representations
is pivotal as breach of term would lead to breach of contract1.
A relevant case in this regards is Oscar Chess v Williams2. This case is vital since it
highlights the pivotal factors to consider whether the given representation would be
considered as term or not. In this regards, it is noteworthy that if a party makes any
representation which is within the scope of knowledge of the concerned party and the other
party relies on the same, then the given representation would be considered as term. Also, a
binding promise which is non-essential is termed as warranty3.
Application
Based on the relevant law, it is imperative to categorise the various statements made by Effah
to determine the presence of any term which would be included in the contract. The
statements whereby Effah indicated his opinion about the product being amazing and
allowing Joan to fit in extra clients all retort to puffery as these are not factual statements.
One of the representations about the MowMaster 3000 is that it is made in Germany with the
best parts but considering the non-essential nature, it would not be regarded as a term.
However, another representation is that the blades would cut through anything without
1 Andy Gibson and Douglas Fraser, Business Law (Pearson Publications,2014, 8th edition ) 125
2 Oscar Chess v Williams [1957] 1 WLR 370
3 Shayne Davenport, Business and Law in Australia (Thomson Reuters, 2014, 5th edition) 49
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getting blunt. Clearly, this would be a term as Joan has a lawn mowing business and hence
this is a vital attribute that would influence the buying decision.
Conclusion
A contractual term based on Effah’s statement about the mower relates to the blades being
able to cut through any object without getting blunt. The remaining statements are either
puffery or mere representations.
Question 2
Issue
The key legal issue is to determine if the exclusion clause present at the sales counter would
be considered enforceable or not.
Rule/Law
An exclusion clause is defined as any contractual term which is inserted by one party in order
to limit the contractual liability arising in case of certain events. There are certain conditions
to be met in order to ensure that this clause is enforceable. One of these is that the exclusion
clause is included in the written contract which is then signed by both parties. In such cases,
even though the exclusion clause may not have been read by the other party before signing,
but owing to the existence of a signed written contract, it is assumed that the exclusion clause
was read and agreed to. This aspect has been highlighted in L'Estrange v F Graucob
Ltd4 case.
Another pivotal requirement is that a reasonable notice ought to be given to the party when
the exclusion clause is not inserted in the written contract. This is typically the case when the
exclusion clause is displayed. In such cases, the clause ought to be brought to the attention of
the buyer unless the buyer has significant amount of previous business dealings. This has
been highlighted in the verdict of Balmain New Ferry Co Ltd v Robertson5 case.
Application
4 L'Estrange v F Graucob Ltd [1934] 2 KB 394
5 Balmain New Ferry Co Ltd v Robertson (1904) 4 CLR 379
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