• For a court of law to consider the effect of an exemption clause in a contract, it was in the first instance be satisfied that the clause was an integral part of the contract. The party affected by the clause must have been aware of its existence.
• An exemption clause may be made part of a contract by signature or notice.
• If the clause is embodied in a document signed by the parties, the court must be satisfied that the document contained the terms of the contract. As was the case in L‟Estrange V.Graucob.
• The court must in the same breath be satisfied that the party affected by the clause signed the document voluntarily. Signature prima facie means acceptance. However the signature is voidable at the option of the innocent party if its contents were misrepresented. As was the case in Curtis V. Chemical Cleaning and Dyeing Co.
• The party affected by the clause must have been aware of its existence when the contract was entered into. A belated notice of an exemption has no effect on the contract. As was the case in Lougher V. Kenya Safari Lodges and Hotels Ltd.
• If an exemption clause is ambiguous or uncertain, it must be interpreted Contra Proferentes
i.e. strictly against the party relying on it. As was the case in Houghton V. Trafal gar Ins. Co.
• As a general rule a third party cannot take advantage of an exemption clause in a contract it was not party to. As was the case in Halal Shipping Co. Ltd V. Securities BremerAllegemeine.
• An exemption clause cannot as a general rule be given effect if doing so enables a party to the contract evade the fundamental obligation of the contract. As was the case in Karsales(Harrow) Ltd V. Wallis where it was held that although the exemption clause had been incorporated into the contract, it could not be given effect as doing so amounted to a fundamental breach of contract by the plaintiff.
The party alleging fundamental breach must prove it.
