Legal analysis of exclusion clause

The critical issue is to opine on the applicability of the exclusion clause and thereby highlight the legal rights available to Batty with regards to demanding compensation from Qualal Motors for the damages suffered.

The critical aspect that requires analysis is the concept of exclusion clause and the applicability of the same.

Exclusion clause may be defined as a term in the contract which serves to protect the interest of the inserting party by mitigating or limiting the liability arising from the happening of certain defined events (Carter, 2012). The validity of the exclusion clause requires the satisfaction of the following two pre-requisites.

• The communication of the exclusion clause to the other party must happen before the contract is executed

In order to ensure that the inserted exclusion clause is valid, it is necessary that all reasonable efforts must be undertaken in order to communicate or intimate the other party about the existence of this clause and thereby obtaining consent on the same. Absence of reasonable effort on the part of the clause inserting party would result in the exclusion clause being declared void as apparent from the verdict of Thornton v Shoe Lane Parking [1971] 1 All ER 686 case (Lindgren 2015).  

In the above case, a car and its driver were injured during the parking of the case owing to the fault of the parking space owner. The driver (plaintiff) demanded compensation from the owner of the parking lot on account of negligence. But the owner of the parking space cited the exclusion clause which was printed on the back of the ticket which absolved the company and employees from any liability whatsoever. However, in this case, the honourable court ruled in favour of the plaintiff and highlighted that the customer came to know about the existence of the exclusion clause only after the automatic dispenser issues the ticket. But the parking of car precedes the ticket issuance and therefore it was regarded as null and void (Paterson, Robertson and Duke, 2015).

Yet another case which highlight the importance of pre-contractual communication is Olley v Marlborough Court [1949] 1KB 532. Just as in the case discussed above, this case also involved the communication about the exclusion clause to the plaintiff only after contract execution. As a result, the exclusion clause was held as void and non-enforceable. Hence, through the above examples, it is evident that communication of the clause to the plaintiff is an imperative aspect to be considered (Davenport and Parker, 2014).

For the exclusion clause to be considered enforceable, it is essential that it must not violate any particular statute especially those aimed at consumer protection. If any such provision is violated by the insertion of exclusion clause, then the exclusion clause would not be held as valid and legally enforceable (Gibson and Fraser, 2014).

Validity of exclusion clause

Another crucial aspect in exclusion clause is when such clause aims to act as shield against the negligence of the defendant. In such cases, for the exclusion clause to be enforceable, it is mandatory that the clause has to be communicated directly to the other party and informed consent be obtained before proceeding (Paterson, Robertson and Duke, 2015).

Also, in regards to negligence, it is imperative to note three major aspects that are required. One of these is that the defendant should have a duty to care directed at the plaintiff.  For the existence of this duty, it is mandatory that in the given circumstance, it would be reasonable for any person to be defendant’s position to expect that the decision to act or not in a particular manner could potentially cause harm to the other party as highlighted in the Donoghue v. Stevenson [1932] AC 562 at 580 case (Pendleton and Vickery, 2015). The defendant needs to take all reasonable steps to discharge the duty to care. In order to do so, based on the underlying risk all reasonable measures need to be undertaken to prevent any foreseeable damage (Latimer, 2016). If such measures are not taken, then there is a breach of duty to care which can lead to plaintiff suffering damages. The tort of negligence is established if the plaintiff can establish a causal relation between the damages suffered and breach of duty to care (Edlin, 2014).

It is evident that the towing machine is operated by Qualal Motors through the agents and there is a duty to care on the part of Qualal Motors to ensure that the car or any other person in the neighbourhood does not get any damage. However, it is apparent from the case facts that in the given scenario, the towing gear is using a worn clip which is responsible for the falling of the car. Considering the damage involved in terms of damage to the car and any bystanders, it would be reasonable to expect that the towing gear would be regularly inspected and any worn out or faulty part would be replaced. However, this does not seem to have been done by the garage owing to which damage has been suffered. The suspension of the car has been damages and also Batty has suffered physical injury due to rolling of the car on his foot. The causal relation between the breach of duty and damage is also apparent since in the absence of breach of duty, the car would not have fallen and no damage would have been suffered.

In relation to the legal tenability of the exclusion clause defence posed by Qualal Motors, it is evident that Eddie while being present at the car site did not inform Batty about the exclusion clause related to towing machine use. Further, this clause was printed at the rear end of the machine and hence Batty would have come to know about the same only after it came and the car is towed. Thus, when Batty decided to take the services of the towing machine, he had no information about the exclusion clause which provided absolute immunity to the garage owner and employees. Considering the case facts in the light of the relevant rule section, it is apparent that the exclusion clause would not be applicable in this scenario and thus the defence posed by Qualal Motors would not stand legal scrutiny.

Conclusion

Since the garage has acted negligently owing to which damage has been suffered by Batty and his car, thus Batty has the legal right to sue Qualal Motors for the damages suffered. Further, the exclusion clause would not provide any protection to the garage since it was not communicated to Batty before calling in the towing machine.

References

Carter, J. (2012) Contract Act in Australia. 3rd ed. Sydney: LexisNexis Publications.

Davenport, S. and Parker, D. (2014) Business and Law in Australia 2nd ed. Sydney:LexisNexis Publications.

Edlin, D. (2014) Common law theory 4th ed. Cambridge: University Press Cambridge.

Gibson, A. and Fraser, D. (2014) Business Law. 8th ed. Sydney: Pearson Publications.

Latimer, P. (2016) Australian Business Law CC. 5th ed. Sydney: LexisNexis Study Guide.

Lindgren, K.E. (2015) Vermeesch and Lindgren’s Business Law of Australia 12th ed. Sydney: LexisNexis Publications.

Paterson, J. Robertson, A. and Duke, A. (2015) Principles of Contract Law 5th ed. Sydney: Thomson Reuters.   

Pendleton, W. and Vickery, N. (2015) Australian business law:  principles and applications 5th ed. Sydney: Pearson Publications.