Interpreting Contracts in English Law - Exclusion Clauses

Exclusion Clauses

In order to tackle the unfairness that can result from the use of exclusion clauses, courts have a variety of tools at their disposal. They can,

1. choose to not incorporate a term, e.g. Thornton v Shoe Lane Parking Ltd
2. interpret a clause restrictively, e.g. Hollier v Rambler Motors Ltd
3. restrict its effect through construction with an implied term, e.g. Johnstone v Bloomsbury Health Authority
4. apply the Unfair Contract Terms Act 1977
5. apply the Unfair Terms in Consumer Contracts Regulations 1999

But before 1977, legislation to directly regulate unfair terms did not exist, and jurisprudence on implied terms was underdeveloped. Even now, with one notable exception, the courts have not accepted that they have any inherent jurisdiction to control unfair terms. It is only under legislation that authority appears to exist. This meant that modes of interpretation were much more important to control unfair terms. In Gillespie Bros v Roy Bowles Ltd Lord Denning remarked,

judges have… time after time, sanctioned a departure from the ordinary meaning. They have done it under the guise of ‘construing’ the clause. They assume that the party cannot have intended anything so unreasonable. So they construe the clause ‘strictly’. They cut down the ordinary meaning of the words and reduce them to reasonable proportions. They use all their skill and art to that end.

But apart from Lord Denning, courts are still unwilling to reserve for themselves an explicit role to regulate contractual terms that could result in manifest unfairness. They have left the job to Parliament.