There are three ways in which written exemption clauses (or in fact any other type of clause) may be incorporated into a contract: by signature, by reasonable notice, and by course of dealing.
Incorporation by signature
If a document is signed at the time of making the contract, its contents become terms of that contract, regardless of whether they have been read or understood. This principle is known as the rule in L’Estrange v Graucob (1934).
The rule does not apply where there is any misrepresentation as to the nature of the document signed. This was illustrated in the case of Curtis v Chemical Cleaning and Dyeing Co (1951) in which the court of appeal held that the plaintiff could not be tied to a signed document as a result of a misrepresentation.
Incorporation by reasonable notice
If written terms are presented at the time a contract is made – by handing over a ticket, or listing them on a sign for example – those terms only become part of the contract if it can be said that the recipient had reasonable notice of them.
- Time of notice: As a rule, an exemption clause is only incorporated into the contract if notice is given before or at the time of contracting.
- Form of notice: The form in which a notice is given is also important . In general, notice of an exemption clause will only be considered reasonable if it is given in a document which a reasonable person would expect to contain contractual terms.
- Effect of the notice clause: The more unusual and onerous a particular term is, the greater the degree of notice required to incorporate it. Highly unusual or onerous clauses cannot be incorporated simply by handing over or displaying a document containing the clause; the party seeking to impose the clause must take special steps to draw attention to it.
Incorporation by course of dealing
If two parties have previously made a series of contracts between them, and those contracts contained an exemption clause, that clause may also apply to a subsequent transaction, even if the usual steps to incorporate the clause have not been taken.