EXEMPTION CLAUSE IN THE LAW OF CONTRACT, ITS SIGNIFICANCE IN

TANZANIAN CONTEXT

Hyera Mozart1

ABSTRACT

In today’s business world, liability is a serious concern when it comes to making

agreements and in these latter environments such as contracts. In order to proceed with
confidence, questions as to the matter of liability and rights should be posed accurately in
the terms of the contract. Thus if there is any liability is intended to be escape on the
future among parties should be addressed primarily before the contract is written or
executed. This concept when addressed within the question of contract law creates the
issue of ‘Exclusion or Exemption Clauses’. This paper intends to assess the validity and the
significance of such clauses in Tanzania.

Meaning of Exemption clauses

An exemption clause in a contract is a term which either limits or excludes a party’s

liability for a breach of contract. 2 These clauses purport to exclude, wholly or in part,

liability for a breach of contract or tort. A total exclusion is referred to as an exclusion

clause; a partial is known as a limitation clause. Exemption clauses are most commonly

found in standard form contracts. To be valid, an exemption clause must satisfy the tests
set by the law and the parties. 3

Graw4 defines an Exemption Clause as

“A term of the contract inserted to exclude or limit liability, and explains that: An

excluding term (an exclusion clause) is one that completely excludes one party’s
liability ... A limiting term (a limiting clause) of much the same nature. However, it

1
LL.B( St. Augustine University of Tanzania- Mwanza); LL.M( Corporate and Commercial law- University of
Dar es Salaam): PGDL(Candidate- The Law School of Tanzania)
2
www.lawteacher.com
3
‘Contract Law’, 4th Ed. , Cavendish Publishing Ltd (2004)
4
Graw, S., (2012), “An Introduction to the Law of Contract”, 7th edition, Lawbook Co.,
Pyrmont, NSW.

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 does not exclude liability entirely; it merely limits it to a particular fixed or
determinable monetary amount.”5

Exemption clauses can be created in a multitude of ways, and are able to exclude

whatever liability the parties to the contract wish to, except for those restricted by

legislation.6 Exemption clause is a standard form of clause in a standard form of contract

containing reduction or abolition of liability to the emergence of legal consequences, for

example, damages due to default or breach of contract, restriction, or elimination of

obligations, providing obligations which arise later

THE RATIONALE OF THE EXEMPTION CLAUSES

Apart from the discussed the major exemption clauses, parties can create several other

clauses that take the nature of exclusive or exemption clauses. They often rise up in
contracts of which parties may create them by their own knowledge or have less
awareness that they are creating such contractual relations

a) Exclusion Clauses

Typically, an exclusion clause is used to eliminate a party from any responsibility in the

case of a breached contract. An exclusion clause may be a full or partial exclusion, but it
will protect that party from any responsibility regarding a specific event.

For example a clause may have terms that state a party is not responsible for the use of

this product in a certain way, such as negligence or recklessness when using that
product, is a common example of an exemption clause.

These clauses have several benefits which include, they remove all liability. Yet the

difficulty isn’t in including an exclusion clause, but in enforcing it. Courts are often

5
ibid pg. 275-276
6
Ibid, lawteacher.com

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suspicious of total exclusion clauses, and unless they are written correctly, they can be

easily overturned. It’s critical that exclusion clauses are clear and reasonable, or a court

will not accept them. A simple way to ensure the consistency and clarity of exclusion
clauses within an organization is by templatizing contracts. With a contract lifecycle

management platform that has access rights along with a full template library,

organizations can be sure that no wording is changed and the company is properly
protected.7

b) Limitation Clauses

The limited liability clause, or limitation clause, is similar to the exclusion clause but does

not go to the same extent as a complete exclusion. With limitation clauses, one party is

not totally excluded from liability in the case of a certain event, but their liability is
limited, often making this kind of contract more acceptable in court.

For example, a limitation clause could state that in the event of an injury, the company

will pay up to Tshs. 500,000 in damages. Limitation clauses are often stated in the

negative, such as “The company will not be liable for more than Tsh. 500,000 in
damages.” This effectively limits the amount of damage that the company can take while

still granting some liability so there is not a total exclusion. Maintaining consistency with

limitation clauses can also be streamlined through templates and preset wording in a
contract lifecycle management platform.

c) Indemnity Clauses

Indemnity clauses are often the most complex out of the three main exemption clauses.

With this particular clause, Ione party agrees to “indemnify” the other party: to

compensate for their harm or loss. This means that instead of seeking to sue for
damages, one party agrees to protect the other party in the case of a lawsuit.

7
https://www.concordnow.com/blog/types-exemption-clauses-found-contract/

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For example, a company may develop a new kind of technology and sell it with an

indemnity clause. A customer then purchases the technology and is subsequently sued

by another company who claims the technology is a copy of theirs. The original
company is then liable to cover the cost of the lawsuit for the customer because of the
indemnity clause included in the contract.

Drafting, managing, and negotiating exemption clauses can be challenging among

startups as they determine what needs to be included, as well as enterprise businesses

as they seek to get visibility and consistency in the agreements being made. Managing a
contract throughout its entire lifecycle from creation to signature and beyond is simpler
when managed on a cloud-based contract lifecycle management platform. Having all

people, processes, and documents in one place brings the benefits of security,

collaboration, and organization to any organization. While the content of a contract may

remain complex, ensuring that content is consistent and easier to manage is possible
with the power of a platform. 8

NATURE OF EXEMPTION CLAUSES IN COMMON LAW AND STATUTORY LAW

1. Statutory Law

These are laws originating from statutes and legislations of a particular state. They

include rules, orders and declaration. Depending on the modality of a state, they are
mostly kept into existence by a law making body and in Common wealth countries like
Tanzania, it’s the legislature or the parliament.

In relation to the concept of Agreements and contracts as well as terms and conditions

associated with exemption clause, the most favorable statutory law in Tanzania is the

Law of Contract Act9. The Act provides for what makes a contract void and not void.

8
https://www.concordnow.com/blog/types-exemption-clauses-found-contract/
9
CAP 345 R.E 2002

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There is no clear provision that expressively provides for how exemption clauses should

be but since they form part of the terms and conditions on any contract then they
should follow the required provisions of the law of Contract.

To begin with, Section 10 provides for what agreements form part of contract. They

should according to the section made by free consent, competent parties, lawful
consideration, lawful objects and shouldn’t be declared void by any law. In critical

observation of the provision, exemption clauses are to only appear in the question
objects of the contract and the question of Consent.

Section 14 defines the scope of free consent to mean that which is not caused by

Coercion, Undue Influence, Fraud, Misrepresentation and Mistake. Therefore in the light

of these requirements, terms of a contract should be show that the parties entered to a
contract with No coercion neither fraud, nor misrepresentation or mistake.

Most exemption clauses related conflicts that require court’s interpretation fall under

the construction of terms and conditions that have shown the lack of free consent

defined within the scope of coercion, undue influence, fraud, misrepresentation and
Mistake.

Section 19 provides the impact of contracts having terms and conditions that have
elements of lack of consent and its criteria. The contract according to the provision will
be voidable. This means it can be enforced one sided only (of which it’s the party n
which was affected)

2. Common law and Exemption clauses

Common law originally developed under the inquisitorial system in England from

judicial decisions that were based in tradition, custom, and precedent. Such forms of

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legal institutions and culture bear resemblance to those which existed historically in

continental Europe and other societies where precedent and custom have at times
played a substantial role in the legal process.

Statutes which reflect English common law are understood always to be interpreted in

light of the common law tradition, and so may leave a number of things unsaid because
they are already understood from the point of view of pre-existing case law and custom.

Before the Statutory laws in England Common laws prevailed through determining

disputes of contracts and interpretation through case laws. In relation to exemption

clause, there are three elements to judicial recognition of exemption clauses:

1. Incorporation

The clause must be actually incorporated into the contract to show that it is part of the

contract and can be relied upon. This requirement applies to all terms, but has been

interpreted strictly in the case of exemption clauses. A term may be incorporated into a
contract by being

This was stated in several cases such as In L’Éstrange v Graucob Ltd (1934), the plaintiff

had signed a contract of sale without reading it. It was held she was bound by the terms
which contained an exemption. The parties therefore entering to a contract are warned

to ensure that they are aware of the future of their terms as far as the contract is
concerned.

Likewise in Olley v Marlborough Court Hotel10 it was held that parties are only bound

by an exclusion clause of which they had express knowledge at the time the contract

was formed and it further explained that parties who have previously contracted on the

10
1949

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same terms are deemed to have express knowledge of the clause and so are bound by
it.

Exception of the Incorporation requirement

1.1. Where the offeree has been induced to sign as a result of misrepresentation.

If the parties to contract allege that the other party has induced him or her into signing

the contract with exclusion clause or misrepresentation then he or she can avoid such an
exclusion clause.

In Curtis v Chemical Cleaning Co (1951), the plaintiff signed a ‘receipt’ when she took

a dress to be cleaned, on being told that it was to protect the cleaners in case of
damage to the sequins. In fact, the clause excluded liability for all damage. It was held

the cleaners were not protected for damage to the dress; the extent of the clause had
been misrepresented and therefore the cleaners could not rely on it.

1.2. The clause must be inserted within the contract

For an exclusion clause to be valid it must form a part of the contract. The courts have

devised a number of rules to ascertain whether or not it has been incorporated into
(made part of) the contract. The document containing the exclusion clause must be part
of the contractual documentation and not a mere receipt or acknowledgement of
payment.11

A major landmark case in this exception is Chapelton v Barry Urban District Council 12

where it where facts demonstrate that Mr Chapelton hired two deckchairs from the

defendant. A sign next to the deckchair gave the price and time limit, but did not refer

to any exclusion clauses. After Mr Chapelton had paid for the deckchairs he was handed

11
http://www.open.edu/openlearn/society-politics-law/exclusion-clauses/content-section-0
12
[1940] 1 KB 532.

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two tickets. The back of the tickets stated that the defendant would ‘not be liable for

any accident or damage arising from the hire of the chair’. When the plaintiff sat on the

deckchair it gave way, causing him injury. The defendant relied on the exclusion clause
contained on the ticket, but the High Court held that this was a voucher or receipt and
did not form part of the contract.

Exception to the exception: This situation is also exempted with the matter of Bill of

Lading. This is an official, detailed receipt which is given, by the master of a ship

transporting goods, to the person consigning (sending) the goods. Despite acting as a
13
receipt, it is commonly treated as part of the contract.

Also, if the party was given a reasonable notice of the existence exemption clause, the

liability is waived to the extent of the reasonable notice given. This was stated in Parker

v South Eastern Railway Co (1877), the plaintiff received a ticket which stated on the
face ‘see back’. The court observed that as long as the railway company had given

reasonable notice of the exemption clause’s existence, it did not matter that the plaintiff
had not read the clause.

In Thompson v London Midland and Scottish Railway (1930), the ticket indicated

that the conditions of the contract could be seen at the station master’s office, or on the
timetable. The exemption clause was in clause 552 of the timetable which cost sixpence

the ticket itself only cost two and sixpence. In the circumstances, nevertheless,
reasonable notice had been given.

13
http://www.open.edu/openlearn/society-politics-law/exclusion-clauses/content-section-0

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2. Construction of the contract must show the clause actually protects the party

inserting it for the damage in question and thus no advantage is gained from
doubt or ambiguity.

For an exclusion clause to have material standards, the contract providing the clause

should be clear and with less ambiguity expressively showing the intention to create an
exclusion from liability or any future contingent that may occur during the whole
execution of the contract.

In case of ambiguity, the case is resolved in favor of the party seeking to show liability.
The courts have sought to restrict the use and scope of exclusion clauses which are

incorporated into a contract; particularly where one party is seen as being in a weaker
bargaining position.14

This was stated in several cases including Andrews Bros (Bournemouth) Ltd v Singer

& Co (1934) the ‘contra preferentum rule’ may apply i.e. the phrasing of the clause must

not be ambiguous. Also in Hollier v Rambler Motors (1972)15 it was held that

ambiguous expression in the clause works against the party including it in the contract.
Facts of this case provide a clear definition of the scope of ‘contra preferentum rule’. The

defendant agreed to repair Mr Hollier’s motor car. While at the defendant’s garage, the
car was damaged in a fire caused by the defendant’s negligence. The defendant sought

to rely on a clause stating, ‘The Company is not responsible for damage caused by fire
to customers’ cars on the premises’. The Court of Appeal held that the clause was not

incorporated into the contract but, in any event, it was not clear enough to exclude the
defendant’s liability. Lord Justice Salmon (at p. 81) stated:

“The ordinary man would I think say to himself: ‘Well, what they are telling me is

that if there is a fire due to any cause other than their own negligence they are not

14
http://www.open.edu/openlearn/society-politics-law/exclusion-clauses/content-section-0
15
[1972] 2 QB 71

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 responsible for it.’ To my mind, if the defendants were seeking to exclude their

responsibility for a fire caused by their own negligence, they ought to have done so
in far plainer language than the language here used.” 16 17

In Andrews Bros v Singer & Co Ltd (1934), an exclusion referring to implied terms was

not allowed to cover a term that the car was new, as this was an express term. It was,
however, suggested by the House of Lords in Photo Production Ltd v Securicor Ltd

(1980) that any need for a strained and distorted interpretation of contracts in order to
control the effect of exemption clauses had been reduced by the statutory law

Especially clear words must be used in order to exclude liability for negligence, for

example, the use of the word ‘negligence’, or the phrase ‘howsoever caused’ (Smith

South Wales Switchgear Ltd (1978)). But, if these words are not used, provided the

wording is wide enough to cover negligence, and there is no other liability to which they
can apply, then it is assumed that they must have been intended to cover negligence
(Canada Steamship Lines v The King (1952).

It was stated in Ailsa Craig Fishing Co v Malvern Fishing Co (1983) that limitation
clauses may be interpreted less rigidly than exclusion clauses. Only a party to a contract

can rely on an exclusion clause. Especially clear words are required when the breach is of

a fundamental nature. In the past, Lord Denning and others argued that it was not

possible to exclude breaches of contract which were deemed to be fundamental by any

exclusion clause, however widely and clearly drafted.

However, the House of Lords confirmed in Photo Production Ltd v Securicor Ltd

(1980) that the doctrine of fundamental breach was a rule of construction not a rule of

16
Hollier v Rambler Motors (AMC) Ltd [1972] 2 QB 71.
17
https://www.studocu.com/en/document/queen-mary/elements-of-contract-law/lecture-notes/10-
contract-law-revision-exclusion-clauses/1508607/download/10-contract-law-revision-exclusion-
clauses.pdf

10 | P a g e
law, that is, liability for a fundamental breach could be excluded, if the words were
sufficiently clear and precise.

The House also stated that: the decision in Harbutt’s Plasticine Ltd v Wayne Tank and

Pump Co (1970) was not good law. In that case, the Court of Appeal had held that as a

fundamental breach brought a contract to an end there was no exclusion clause left to
protect the perpetrator of the breach; there is no difference between a ‘fundamental

term’ and a ‘condition’; a strained construction should not be put on words in an

exclusion clause which are clearly and fairly susceptible of only one meaning; where the
parties are bargaining on equal terms, they should be free to apportion risks as they
wish; the courts should be wary of interfering with the settled practices of business
people, as an exclusion clause often

All in all, the traditional English common law position with respect to Exemption Clauses
has generally been one which upholds the contractual parties’ rights to freedom of

contract; in other words, as long as an Exemption Clauses is well drafted and

unambiguous, under the common law it is likely to be valid. On the other hand, where

there is ambiguity in the wording of an Exemption Clause, the traditional English

common law position has been to construe the clause contra proferentem (i.e. against

the interests of the party seeking to benefit from the EC). This traditional English
common law position was adopted by the Tanzanian courts.

TYPES OF CONTRACT THAT EXEMPTION CLAUSES EXIST MOSTLY

a) Standard form contracts

Exclusion clauses are often found in standard form contracts, such as those used by

utility and mobile phone companies and public transport providers. A standard form

contract is a uniform contract which is used by a large organisation in all its dealings

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with customers. Apart from standard form contracts you will also find exclusion clauses
in individually negotiated contracts.

An example of a standard form contract is a standardized contract form that offers

goods or services to consumers on essentially a "take it or leave it" basis without giving

consumers realistic opportunities to negotiate terms that would benefit their interests.
When this occurs, the consumer cannot obtain the desired product or service unless he
or she acquiesces to the pre-drafted terms of the contract.

Standard form of contract has become a business necessity in relation to efficiency and
effectiveness. The aspect of problems arising in the standard form of contract is the

aspect of imbalance position of the parties. Standard form of contract is potential to be

abused by parties having stronger bargaining power. One of the forms of the imbalance

is the inclusion of exemption clauses that aims to limit or release the liability of one of
the parties.18

It’s further argued that the existence of the exemption clause will be detrimental to the

recipient of the standard form of contract as the contract is based on the importance
attributed to it. The other party at the time of the standard form of contract is proposed,

is faced with several possibilities. The first possibility is that the recipient of the standard

form of contract does not read let alone understand the standard form of contract
offered.

The second possibility is that the recipient reads the contract, but do not understand

because of different levels of understanding. The third possibility is that the contract

beneficiary reads and understands, but is faced with the choice "take it or leave it",
therefore when rejecting (especially on consumers), will still be faced with the choice of

18
Yasmin M, ‘Legal Liability of Standard Form Contract’, International Research Journal of Engineering, IT &
Scientific Research (IRJEIS) Vol. 2 Issue 9, (2016), pg. 39-45, Available online at
http://ijcu.us/online/journal/index.php/irjeis

12 | P a g e
standard form of contract having the same type elsewhere given the homogeneity
nature of standard form of contracts.

The weakness of one of the parties in drawing up standard form of contract needs

protecting by the state. The State intervention is necessary to restore the balance of

position of the parties. The State interference may be in the form of rule establishment
on standard form of contract since the existing rules at present is intended for the final

consumer. In fact, standard form of contract has been used in a wide variety of contracts

not only on consumer contract, but also on commercial contracts such as distribution
contract, the contract franchising and agency contracts

b) Unilateral contracts

These are contracts were one party agrees to do something in return for the act of
another party as opposed to the promise. For instance, where a person promises a

reward to anyone who will find his lost dog, The essence of the unilateral contract is that

only one party to the contract is bound to do something, but no one is bound to search

for the lost dog, but if someone finds seen the offer and returns it, he/she is entitled to
the reward.

SIGNIFICANCE OF EXEMPTION CLAUSES IN TANZANIA BUSINESS ENVIRONMENT

Tanzania is not different from other states that depend on the laws to ensure a peaceful

business environment that has fewer disputes related to contracts. Contracts are entered

daily and questions and issues relating to construction of terms with exemption clauses
arise with them. As modern construction becomes more complicated, technical and

sophisticated this has been reflected in contract documentation used in the construction

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industry. Parties involved in the construction process face potentially catastrophic losses
and therefore often seek to exclude or limit liability for such losses. 19

Here are several significances that arise from the input of Exemption Clause

Exemption clauses are ideal in the whole question of transferring or risk.

There are "various techniques in dealing with risks" according Werremeyer20 which

include retaining risks, insuring against risks, spreading risks as part of a portfolio or

moving away from the activity or "specialising in managing it." There are a number of
ways parties may seek to exclude or limit financial losses in a construction contact. One

of the most frequently used methods used to exclude or limit such losses in a contract is
the insertion of Exclusion clause commonly known as exemption clause.

One approach would use the whole of the contract, including any exclusion clauses, to

define the obligations set out in it. Exclusion clauses are also ideal in showing the

limitations of one’s obligation to the contract, the extent of his obligation and how far
will the obligations affect the parties. For example by excluding a company can

exonerate itself from liabilities that may incur in any reckless endangerment that may

occur by an employ for not wearing a helmet at construction work, which means the

company relieves itself from any obligations whatsoever that may occur within the
exemption clause.

The other approach would be to define the obligations set out in the contract without

reference to the exclusion clauses. The exclusion clauses would then be used as

19
Donohoe S and Coggins J (2013) Enforceability of exemption clauses in construction contracts: a
comparative study of approaches in England and Australia In: Smith, S.D and Ahiaga-Dagbui, D.D (Eds)
Procs 29th Annual ARCOM Conference, 2-4 September 2013, Reading, UK, Association of Researchers in
Construction
Management, pg 739-444
20
Werremeyer, K. (2006), “Understanding and Negotiation of Construction Contracts: A Contractor's and
Sub-contractors guide to Protecting Company assets”, RS Means, Kingston, MA, USA.

14 | P a g e
defences when necessary. This approach defines an exclusion clause a major defence

against any law suits that may arise within the exemption clause. Subject to the
conditions, an exemption clause

Critique to the Exemption Clauses

Despite the above discussions, the idea of exemption clause has led to a rather wide

discussion on the question of freedom to contract and the degree to which courts can
interfere with party’s terms and conditions.

Pro- ‘Freedom to Contract’ advocates the idea that parties should be given the ability to

contract and input terms without any third party’s interference. Advocates for the

freedom of contract justify their approach on the notional basis that "if you don't like

the contract terms, then don't enter into the contract". Support for this approach may
be found in the words of Forbes J, in Salvage Associate v CAP Financial Services21,
who stated:

“Generally speaking where a party well able to look after itself enters into a

commercial contract and with full knowledge of all the relevant circumstances

willingly accepts the terms of the contract which provides for the apportionment of

financial risks of that transaction, I think that it is very likely that those terms will
be held to be fair and reasonable.”

To support this view, Lord Person provided also in Trollope& Colls Ltd v North West
Metropolitan Hospital Board22 by stating

“The basic principle [is] that the court does not make a contract for the parties. The

court will not even improve the contract which the parties have made for

themselves, however desirable the improvements might be. The court’s function is

21
[1995] FSR 654
22
(1973) 9 BLR 60

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 to interpret and apply the contract which the parties have made for themselves. If

the express terms are perfectly clear and free from ambiguity, there is no choice to

be made between different possible meanings; the clear terms must be applied
even if the court thinks some other terms would have been more suitable”
[emphasis added].”

The counterpoint to this approach, however, is the view that the law ought to take

cognizance of unequal bargaining power and oppressive behavior. Accordingly, the

courts throughout the years have tried to steer a middle path, attempting to uphold the
parties' rights to make contracts on any terms they choose (as long as the contract is
not tainted by illegality) whilst at the same time frowning upon extreme instances of
what might be perceived as "sharp practice" or "unconscionability" 23

In Parker v SE Railway Co24considered the validity of an Exemption Clause on the back

of a left luggage ticket. In the landmark case of L’Estrange v Graucob25, it was finally

established that where a person signs an agreement which includes an Exemption

Clause then that person is bound by it whether or not the person bothered to read the
agreement or not

Exemption clauses are viewed as problematic as they have the effect of excluding or
limiting liability on the part of one of the contracting parties. 26 Exemption clauses are as

a result equated to clauses that deprive another party of legal redress. 27 Such clauses
may also negate the purpose of the contract in that they could affect the essence of the
agreement.28

23
ibid, Donohue pg 741
24
(1877) 2CPD 616
25
[1934] 2 KB 394
26
Van der Merwe SWJ et al ‘Contract: General Principles’ 4th ed (Juta Cape Town(2012)
27
See Barkhuizen v Napier 2007 5 SA 323 (CC);
28
Mercurius Motors v Lopez 2008 3 SA 572 (SCA) para 33,

16 | P a g e
A relevant example is the discussion in the case of Mercurius Motors v Lopez where

the court held that an exemption clause that undermines the essence of a contract and

a hidden clause should be clearly and pertinently brought to the attention of a client
who signs a standard instruction form and not by way of an inconspicuous and barely
legible clause that refers to the conditions on the reverse side of the page in question. 29

Another concern is the question of consumer protection and freedom to contract in

relation to exemption clause created by the parties. The major issue that rises is the

balance that can be created between the two. How and to what extent are consumers
protected when entering to a standard form agreement? It has been noted that a large
percent of consumers don’t read standard form contracts. Reading is boring,

incomprehensible, alienating, time consuming, but most of all pointless. People want

the product, not the contract. Besides, lots of people buy the product or the service

along with the same contract and seem happy enough, so we presume that there must
be nothing particularly important buried in the contract terms. 30

On the other hand even if they did read? Surely, there is nothing they can do about the

bad stuff they know they will find. Are they going to cross out the unfavourable term? Is
there room for them to negotiate? Other than lose the excitement about the deal and
maybe walk away from it (to what? A better contract?), there is not much individuals can

do. Dedicated readers can expect only heartache, which is a very poor reward for

engaging in such time-consuming endeavour. Apart from an exotic individual here or

there, nobody reads.31

29
Mercurius Motors v Lopez 2008 3 SA 572 (SCA)
30
Ben-Shahar, O. (2009) ‘The myth of the “opportunity to read” in contract law’, European Review of
Contract Law, vol. 5, no. 1, pp. 1–28.
31
Ibid, Ben

17 | P a g e
In Tanzania, Consumers are protected by several laws but the major one is the Fair

Competition Act.32 The primary objectives of the FCA are, to promote and protect

effective competition in trade and commerce, to protect consumers from unfair and
misleading market conduct and to provide for other related matters in order to: increase

efficiency in the production, distribution and supply of goods and services; promote
innovation; maximize the efficient allocation of resources; and protect consumers. 33

But even with such objectives, the Act only limits the unfair trade practice and doesn’t

go into details in assessing the terms of the contract created especially standard form
contract. This creates a grey area which the law has not covered in its
comprehensiveness.

Conclusion

Exemption clauses are commonly provided in contracts by parties in the construction

industry in an attempt to limit their liability for loss or exclude such liability altogether.

The operation of exemption clauses in a legal context, however, has proved to have

been fraught with great difficulties in implementing the provisions especially when one
side is ignorant of the exclusion due to practice created by customs and trade practice.

Thus to strike the balance, there is a need for Tanzania to introduce a legislation that will

ensure the unfair trade terms are limited so to protect the needs of both the ignorant

party as well as consumer who are presumed to be ignorant of the nature of the
product as well as the liabilities the sellers have.

32
Act. No. 8 of 2003
33
Section 3 Act No. 8 of 2003

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REFERENCES

STATUTES AND LEGISLATION

1. The Law of Contract Act, Cap 345 R.E 2002

2. The Fair Competition Act, Act No. 8 of 2003

3. The Unfair Trade Terms Act(UK)

CASE LAWS

1. Curtis v Chemical Cleaning Company [1951] 1KB 805

2. L’Estrange v Graucob [1934] 2 KB 394

3. Parker v SE Railway Co (1877) 2CPD 616

4. Olley v Malborough Court [1949] 1 KB 532

5. Thompson v LMS Railway [1930] 1 KB 41

6. Thornton v Shoe Lane Parking Ltd [1971] 2 QB 163)

7. Mercurius Motors v Lopez 2008 3 SA 572 (SCA)

8. Barkhuizen v Napier 2007 5 SA 323 (CC);

9. Hollier v Rambler Motors (AMC) Ltd [1972] 2 QB 71.

10. Photo Productions Ltd v Securicor Transport [1980] AC 827.

ARTICLES AND BOOKS

1. Cavendish ‘Contract Law’, 4th Ed. , Cavendish Publishing Ltd (2004)

2. Graw, S., (2012), “An Introduction to the Law of Contract”, 7th edition, Lawbook Co.,
Pyrmont, NSW.
3. Yasmin M, ‘Legal Liability of Standard Form Contract’, International Research Journal of
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