Test: exclusion clause, Implied Terms and Section 14 of the SOGA PDF

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MAGRET AZEYRA RAP 2019333973 Question 1 (Exclusion Clause) (10 marks) Issue: ​Whether Laila can take action towards Heather, even if there is an exclusion clause that excludes her for liability. In CIMB Bank Berhad v Anthony Lawrence Bourke (2019): -The Plaintiffs took a loan from The Defendant to p...

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GROUP A MAGRET AZEYRA RAP 2019333973

Question 1 (Exclusion Clause) (10 marks) Issue: Whether Laila can take action towards Heather, even if there is an exclusion clause that excludes her for liability. In CIMB Bank Berhad v Anthony Lawrence Bourke (2019): -The Plaintiffs took a loan from The Defendant to purchase a property in Malaysia. As the property was under construction, the loan was to be disbursed progressively against certificates of completion. Under the Loan Agreement, the Defendant was to make direct payment to the developer on behalf of the Plaintiffs when the progressive costs became due for payment. Due to negligence, the Defendant did not inform the developer or the Plaintiffs of the requirement for a site visit as a condition to disburse the amount and did not request the developer to extend the payment due date to conduct the site visit. A year later, the sum remained unpaid, and the developer terminated the sale and purchase agreement with the Plaintiffs. -The Plaintiffs’ claim was dismissed by the High Court, which held that Clause 12 of the Loan Agreement absolved the Defendant from any liability to the Plaintiffs. The Plaintiffs’ was allowed to appeal; hence, the decision was reversed and allowed the claim by the Plaintiffs. The Court of Appeal’s decision that section 29 of the CA renders void clauses which restrict the right of customers to enforce a contract by the usual legal proceedings. Further, provisions which purport to limit the time to sue under the contract are equally void. Law: An exclusion clause is a clause in a contract that aims to exclude the liability of another party and allow them to escape any responsibility that might arise. After an exemption clause has been appropriately incorporated into the contract, hence the court would interpret the clause to determine to ensure it is fair, reasonable and covers breach. There are four matters concerning the interpretation of exclusion clauses: 1. Contra Proferentem - W  hen a clause in the contract is ambiguous, the court will read into the clause against the maker. The person who put the clause into the contract shall the exclusion clause be read against him. a. Case: Houghton  v Trafalgar Insurance [1954]: a driver was carrying six people in a 5-seater car and got into an accident. The driver’s insurance policy stated that ‘whilst the car is carrying any load over that for which it was construed.’ It was held that a reference in an insurance contract to excess ‘any loads’ did not apply where a car was carrying more passengers than the number which it was constructed to carry.

GROUP A MAGRET AZEYRA RAP 2019333973

2. Negligence - When the party relying on the clause “will not be liable for whatever caused” and the words used must be sufficiently clear to show the intention to exclude negligence. They must have exact words of negligence. 3. Rule of law - When there has been a fundamental breach, hence the clause stated cannot be relied upon too. Whereby the party should not be entitled to rely upon it if he has committed a breach which goes into the root of the contract. 4. Rule of construction - The ordinary literal meaning of the clause in the contract. Whereby what would a reasonable man understand for the contract itself. Application: applying the rule of Contra  Proferentem -If the language is ambiguously used, this will be construed in the claimant’s favour. Heather’s exclusion clause stated that “… the seller for any loss of damage incurred nor will the seller be liable for any death or personal injury…” -The would is not ambiguous because baked goods such as cakes, biscuits, and pastries are poisonous for animals. As a pet-owner, Laila knows this, and after paying for the goods, the buyer can do whatever she wants to the goods. -Also, Laila shares her goods with her friends, and since it was not stated in the given question that any of them had died, it can be submitted that the deadly poison in the biscuits is not poison to humans but animals. -Hence, the statement “any death” does include humans and animals. The word ‘any’ would apply that there is a lack of restriction upon the death of something or someone, to whom the goods are consumed.

Conclusion:-The words in the stated is not ambiguous. Hence, Heather is not liable for the death of Laila’s dog.

GROUP A MAGRET AZEYRA RAP 2019333973

Question 2 (Implied Terms) (5 marks) Fact: A shophouse was sublet to D by Joseph Chong (JC) who was the administrator of the estate of the deceased owner. The tenancy was for nine years and three months. Clause 2 of the sublease permitted the sublessor to determine the sublease by notice on the happening of certain events. Clause 4 provided for compensation to the sublessee by the sublessor in a situation of pre-termination by the latter when the sublessee is not at fault or in breach of the covenants. -The sublease was registered at the Land Office with the consent of P who had lodged a caveat against the shophouse. P also gave an undertaking not to terminate the tenancy until its expiry. However, a three-month notice to quit was later served on D. The P claimed for possession of the shophouse and for damages for alleged trespass. None of the clauses of the sublease was pleaded. Held: dismissing the appeal -A fixed-term lease, an option to terminate the lease before its expiry is normally expressly provided where an agreement already contains terms for termination, the onus lies on the person who contends that a further such term ought to be implied. the courts will not imply covenants which might and ought to have been expressed if intended by the parties unless it is necessary to give business efficacy to the contract and obvious Chong Siew Fai J stated: -The words 'sooner determination' is when the conditions in the sublease provide for determination of the sublease during its currency, it does not create an implied condition for the sublessor to determine the tenancy before the expiration of the fixed term. -A term cannot be implied unless the parties must necessarily have intended it such that both would have answered: 'Oh of course' to an officious bystander had he suggested it in negotiation. -A term to be implied in a contract, it must be both necessary to give business efficacy to the contract and obvious. -Clause 4 is capable of being effective and subsisting without the need of incorporating the implied covenant of the sublessor to determine the sublease during its currency and the test of 'necessary for business efficacy' does not necessitate the suggested covenant in favour of the sublessor to be implied by reason of the existence of the clause.

GROUP A MAGRET AZEYRA RAP 2019333973

Question 3 (Implied Terms) (5 marks) Section 14 of the SOGA is divided into three parts: Section 14 (a), (b) and (c) -Section 14(a) states that an implied condition on the part of the seller that whatever he is selling he must have the right to sell such goods. -If a condition is not provided in a contract between the parties, such condition in a contractual relationship is still implied by the law. Hence, even if there is a term in the said contract that stated the seller owns such goods, but the law would still imply such condition as valid. -Selling something, he does not own: Rowland v Divall [1923] -P car dealer had bought a car from D. The vehicle had previously been stolen, but neither party was aware of this at the time. Later, P resold the car to a third party but was reclaimed by the valid owner’s insurance company. Hence, P had to repay the purchase price to the third party and then sought to recover what he had paid to D. -It was held, D breached the implied condition and allowed the P to recover the full price. -The condition would be breached if the seller owned the goods, but he is infringing someone’s trademark or copyright: Niblett v Confectioners’ Co [1921] -The C purchased a thousand tins of condensed milk that was labelled ’Nissly’ from D. The C was told by Nestle, if they attempted to sell the cans, the company would apply for an injunction as the label was very similar to the company’s brands. C agreed not to sell them and brought an action against the sellers. -It was held, the sellers did not have the right to sell the goods, and therefore the buyers were entitled to repudiate the contract....