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Legal Terms - exemption clause
A clause in a contract that is intended to limit or exclude the liability of one of the parties for a breach of obligation in specific circumstances. Exemption clauses are not regarded favorably by the courts. They will interpret such a clause narrowly rather than broadly if it is ambiguous. If an exclusion or restriction is not explicitly stated in a formal contract but is specified or referenced in an informal document, such as a ticket or a notice posted in a hotel, it will not be considered a term of the contract unless reasonable measures were taken to inform the affected party of the exclusion or restriction at the time of the contract (Parker v South Eastern Railway (1877) 2 CPD 416, All ER 166). Certain exemption clauses are subject to a reasonableness test under the Unfair Contract Terms Act of 1977, which is applicable to business-to-business transactions. The Consumer Rights Act 2015 includes provisions that restrict the extent to which an individual can exclude or restrict their business liability toward consumers. These clauses are monitored and enforced by the Competition and Markets Authority, as per the 2015 Act. Other statutes that prohibit the exclusion or restriction of specific forms of liability include the Consumer Protection Act 1987, the Road Traffic Act 1978, and the Defective Premises Act 1972.
A clause in a contract that is intended to limit or exclude the liability of one of the parties for a breach of obligation in specific circumstances. Exemption clauses are not regarded favorably by the courts. They will interpret such a clause narrowly rather than broadly if it is ambiguous. If an exclusion or restriction is not explicitly stated in a formal contract but is specified or referenced in an informal document, such as a ticket or a notice posted in a hotel, it will not be considered a term of the contract unless reasonable measures were taken to inform the affected party of the exclusion or restriction at the time of the contract (Parker v South Eastern Railway (1877) 2 CPD 416, All ER 166). Certain exemption clauses are subject to a reasonableness test under the Unfair Contract Terms Act of 1977, which is applicable to business-to-business transactions. The Consumer Rights Act 2015 includes provisions that restrict the extent to which an individual can exclude or restrict their business liability toward consumers. These clauses are monitored and enforced by the Competition and Markets Authority, as per the 2015 Act. Other statutes that prohibit the exclusion or restriction of specific forms of liability include the Consumer Protection Act 1987, the Road Traffic Act 1978, and the Defective Premises Act 1972.
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