The issue in this situation is whether the exclusion clause in the 2016 agreement made

by West Bank could take effect.

Exclusion clause is a term in a contract which intends to limit the scope of the
performance of a contractual party or excluding one of the parties’ liability. There are 2 ways
where exclusion clause could be inserted, which are through incorporation and interpretation.
There are 3 ways for an exclusion clause to be incorporated into a contract, which are by
notice, by course of dealing and by signature in a written document.

By signing a written document, the party is bound by the contract despite not reading
the contract. This rule can be seen in the case of L’Estrange v F Graucob Ltd. In this case, the
plaintiff entered into a contract to purchase a cigarette vending machine with the defendant.
The agreement included an exclusion clause which excluded all implied warranties and
conditions. The plaintiff signed the contract despite not reading it and not knowing the
existence of the exclusion clause. The machine became faulty and the plaintiff claimed that
the defendant had breached the Sale of Goods Act for selling a machine that was not a
merchantable quality. The court held that the terms in the contract would have a binding and
effective effect towards the plaintiff once she has signed it, even if she has not properly read
the contract.

However, the party would not be bound by the signed document if there is existence
of fraud or misrepresentation, this is seen in the case of Curtis v Chemical Cleaning &
Dyeing Co Ltd, where the plaintiff went to send her wedding dress to be cleaned to the
defendant’s laundry. During the purchase of the service, the shop assistant gave the plaintiff a
receipt that contained an exclusion clause and asked the defendant to sign it. The shop
assistant informed that the receipt would contain an exclusion clause of the defendant’s
liability against certain risks such as damaged beads and sequins. However, the document
actually read that the defendant would not be liable for all of the risks, not just beads. The
plaintiff then signed the document after hearing the shop assistant’s information. The dress
was returned and had a stain on it, in which the plaintiff then brought an action against the
defendant. The court held that the defendant could not rely on the exclusion clause as the
shop assistant had misrepresented the exact scope of the clause, which excludes the liability
of the defendant for all risks and not limited to sequins and beads.

For interpretation, the exclusion clause in the contract would be valid and enforceable
if the term that is used to explain or state the clause is clear and specific in its meaning
without any ambiguity. Thus, the court will interpret whether the clause is fair and reasonable
which covers the breach that occurred. There are 4 ways where the court may use for
interpretation, which are contra preferentum rule, effect of negligence, rule of law and rule of
construction.

The relevant method of interpretation in this situation is the effect of negligence. In

this context, the court would look on whether the exclusion clause clearly seeks to exempt
liability for loss caused by a party’s own negligence. In Canada Steamship Lines Ltd v The
King, (insert facts), the court had laid out three rules for exclusion clause that exempts
liability for negligence. Firstly, the clause must have stated clearly in the clause to exclude
their liability. Secondly,