EXCLUSION CLAUSES IN CONTRACT Leslie Kelleher*, Summaries of Contract Law

Download EXCLUSION CLAUSES IN CONTRACT Leslie Kelleher* and more Summaries Contract Law in PDF only on Docsity! EXCLUSION CLAUSES IN CONTRACT Leslie Kelleher* I. Introduction Exclusion of liability by agreement is familiar in common law. In tort law, there is the application of the maxim volenti non fit injuria. In contract law, exclusion clauses are used for this purpose. Also known as exemption, disclaimer, or limitation clauses, they are, as a general guide, any term which purports to restrict, modify or exclude a remedy or liability arising out of a breach; or which appears to exclude or restrict a liability or duty that would otherwise arise. IL Types of Exclusion Clauses A number of different terms can be classified as exclusion clauses. They have been fully discussed and analyzed elsewhere, so I shall just list them briefly.' A. Clauses purporting to completely exempt liability for breach or to prevent the action from ever becoming a breach A good example of this type of clause is the clause litigated in Photo Production v. Securicor.2 In that case, Securicor had contracted to provide security services to Photo Productions. Musgrove, an employee of Securicor, started a fire, and the entire factory was burned down. An exclusion clause in the contract said: Under no circumstances shall the Company [Securicor] be responsible for any injurious act or default by any employee of the Company unless such act or default could have been foreseen and avoided by the exercise of due diligence on the part of the Company as his employer; nor, in any event, shall the Company be held responsible for; (a) Any loss suffered by the customer through burglary, theft, fire or any other cause, except insofar as such loss is solely attributable to the negligence of the Company's employees acting within the course of their employment .. .2a The House of Lords found that liability for deliberate acts, as well as for negligence, was excluded, and that Securicor was not to be held liable for the damage. Included in this class, as well, are clauses excluding express or implied terms, such as warranties of fitness and merchantability, which would other- wise be implied by the Sale of Goods Act.3 For an example, see Chabot v. Ford Motor'Co.3a. In that case, the manufacturer's `warranty' purported to exclude all other warranties, express or implied. This type of clause is often rendered ineffective by provincial consumer protection legislation (see below — legislation). • Student. Faculty of Law, University of Manitoba. Funded by the Walter C. Newman, Q.C. legal research fund. Supervised by Professors Art Braid and Bryan Schwartz of the University of Manitoba Faculty of Law. I. See D. Yates, Exclusion Clauses in Contracts (2nd ed. 1982)33-41: B. Coote, Exception Clauses (1964) I-I8, 144-156. 2. [1980] I All. E.R. 556, [1980] 2 W.L.R. 283 (H.L.). 2a. Ibid., at 559. 3. R.S.M. 1970, c. S l 0, s.16. 3a. (1982). 138 D.L.R. (3d) 417 (Ont. H.C.). 19 84 C an LI ID oc s 14 3 136 MANITOBA LAW JOURNAL VOL. 14 B. Limitations on the promisor's liability for breach, or on the promisee's available remedies A limitation of liability is not the same as a liquidated damages clause, which is not normally considered an exclusion clause. A limited liability clause does allow for some damages on breach, but it is not a genuine pre- estimate of damages, and is inserted for the benefit of only one party, while a liquidated damages clause is included for the benefit of both parties to the contract, and is construed less harshly. Where the term is a liquidated damages clause, the party establishing the breach does not have to prove any damage in fact. If it is a limitation of liability, the party claiming damages must prove damages at least to the limit set by the clause.4 Thus, the distinction can be important from a purely procedural point of view. Distinguishing between clauses which limit liability, and liquidated damages clauses may be difficult, for the latter does not have to be a true estimate of damages. As well, limitations clauses are often labelled liqui- dated damages clauses. The important factor is the intent of both parties. C. Excepted perils and promissory warranties found in insurance contracts Excepted perils clauses are the type that exclude the insurer's liability for damage or destruction of the insured property by war, nuclear explosion and the like — which perils are insured against is often regulated by stat- ute.5 These clauses are to define the insurer's obligations under the contract; to outline the losses for which he agrees to be liable. In insurance contracts, the term `warranty' corresponds to `condition' in ordinary contract terms. An example of a promissory warranty is that the insured promises to install a burglar alarm system, failing which, the insurer has the right to repudiate the contract.' D. Time limitations for seeking a remedy or giving notification of a claim A successful clause of this type was dealt with in Smeaton Hanscomb & Co. v. Sassoon I. Setty, Son & Co.,' where the clause stated that any dispute must be referred to arbitration within 14 days. E. Indemnity clauses An example is those clauses often used in construction contracts, in which the contractor indemnifies the owner for liability for any injuries on the site.' An illustration is the clause used by a commercial customer of an insurance company in which the security company agrees to indemnify the 4. Sec Suisse At!antique Société d'Armament Maritime S.A. v. N.V Rotterdamsche Kolen Centrale, [1966] 2 All E.R. 61, [1967] I A.C. 361 at 420 (H.L.) (per Lord Upjohn). 5. See for example, Insurance Act, R.S.M. 1970, c.140, s.138(I ). 6. See for example, Tilden Rent-a-Car v. Clendenning (1978), 18 O.R. (2d) 601 (C.A.). 7. [1953] I W.L.R. 1468, [1953] 2 All E.R. 1471 (Q.B.). 8. Arbitration clauses (as well as liquidated damages clauses) are generally not included. See United Kingdom, Parliament, Law Commission, Report on Exemption Clauses (2d), Report No. 69, (London: The Commission, 1975) 63. cf. Anglo-Continental Holidays. Ltd. v. Typaldos Lines (London), Ltd., [1967] 2 Lloyd's Rep. 61 (C.A.). 19 84 C an LI ID oc s 14 3 NO. 1, 1984 EXCLUSION CLAUSES IN CONTRACT 139 there was an endorsement on the ticket in red which referred to conditions on the back, there had been a reasonable effort to bring a clause limiting liability for injury to the notice of the plaintiff. A rather surprising decision, in view of the fact the plaintiff had no real opportunity to examine the ticket and assent to its terms, and that the defendant had no reasonable grounds to believe he had done so. In light of recent decisions such as Tilden Rent- a-Car v. Clendenning,19 it is submitted that if the case were decided today, the outcome would be different. The courts are reluctant to set stringent rules for the notice require- ment. It is clear that the exclusionary clause must be obvious; the more sweeping the clause, the more obvious it must be.20 The degree of knowledge required by the party against whom the clause operates is unclear. In Parker v. South Eastern Railway Co.,2' Midlish L.J. said that it would be sufficient if the party was aware, or ought to have been aware, that the document contained terms and conditions. Denning L.J., in Spurling v. Bradshaw,22 also said constructive knowledge is sufficient. However, in McCutcheon v. David MacBrayne Ltd.,23 Devlin L.J. seems to say that actual knowledge must be proven. That judgment, however, has been criticized for being too subjective.24 Today, it is generally accepted that the test is an objective one. Proferens may satisfy the notice requirement by having the other party sign the contract. Traditionally, a signature was thought to be conclusive proof of assent to the contract's terms, according to the Rule in L'Etrange v. Graucob.25 Scrutton L.J., following dicta in Parker v. South Eastern Railway Co., held that: When a document containing contractual terms is signed, then, in the absence of fraud, or, I will add, misrepresentation, the party signing it is bound, and it is wholly immaterial whether he has read the document or not.L6 To avoid the consequences of this harsh doctrine, the signing party had to prove a misrepresentation. Fraud was, of course, sufficient,27 and in Curtis v. Chemical Cleaning and Dyeing Co.,28 Denning L.J. held that an innocent misrepresentation would oust an exemption clause as well.29 In Curtis, the plaintiff took a satin, sequin-covered dress to be dry- cleaned, and was asked to sign a receipt. When Mrs. Curtis asked why she was to sign, a clerk told her that the defendant dry cleaner would not take responsibility for certain risks, such as the risk of damage to the sequins. The receipt actually contained a clause purporting to exempt the cleaner 19. Supra n. 6 (see also infra). 20. See J. Spurting Ltd. v. Bradshaw, [ 1956] I W.L.R. 461 (CA.); Thornton v. ShoeLane Parking, (19711 2 Q.B. 163 (C.A.). 21. (1877), 2 C.P.D. 416 (C.A.). 22. Supra n. 20, at 468. 23. [1964] I W.L.R. 125 (H.L.). 24. See Hardwick Game Farm v. S.A.P.PA., [ 1969] 2 A.C. 31 (H.L.). 25. [1934] 2 K.B. 394. 26. Ibid., at 403. • 27. See for example, Ward y. Hobbs (1878), 4 A.C. 13 (H.L.). 28. 11951 ] I K.B. 805. 29. See Mendelssohn v. Normand Ltd., [ 1969] 2 All. E.R. 1215 (CA.); followed in Canada by, Canadian Acceptance Corp. v. Mid-town Motors Ltd. (1970), 72 W.W.R. 365 (Sask. D.C.). 19 84 C an LI ID oc s 14 3 140 MANITOBA LAW JOURNAL VOL. 14 from liability for any damage, however caused. It was held that the defend- ant could not rely on the exclusion clause because the innocent misrepresentation by the clerk had given Mrs. Curtis a false impression of the effect of the clause and had induced her to sign. The Ontario Court of Appeal, with their decision in Tilden Rent-a-Car v. Clendenning,30 have gone a step further, by holding that the signing party may not necessarily have to prove misrepresentation by the proferens. This case dealt with a promissory warranty in an insurance contract. The plain- tiff, Clendenning, had rented a car from the defendant company, and purchased additional insurance coverage at the same time. Although he had rented cars from Tilden on a number of occasions, he had never actually read a copy of the standard contract of insurance. On the back of the form, in small type, was a clause saying that the customer agreed not to allow the car to be operated by anyone who had consumed any intoxicating liquor, whatever the amount. Clendenning was involved in an accident, and, although he had been drinking, evidence was accepted that he had not been intoxi- cated, and the accident was not his fault. Tilden, however, refused to pay on the insurance, relying on the Rule in L'Etrange v. Graucob31 to allege that Mr. Clendenning's signature on the contract was proof of his consent to the harsh disclaimer clause. Mr. Clendenning had realized that he would be responsible for any accident he had while intoxicated, but assumed, quite naturally, that he would be responsible only if incapable of proper control of the vehicle. Dubin J.A., holding that the clause did not exclude Tilden's liability, said: Consensus ad idem is as much a part of the law of written contracts as it is of oral contracts. The signature to a contract is only one way of manifesting assent to contractual terms.32 He later went on to say: In modern commercial practice, many standard form printed documents are signed with- out being read or understood. In many cases the parties seeking to rely on the terms of the contract, knows or ought to know that the signature of a party to the contract does not represent the true intention of the signer, and that the party signing is unaware of the stringent and onerous provisions which the standard form contains. Under such circumstan- ces, I am of the opinion that the party seeking to rely on such terms should not be able to do so in the absence of first having taken reasonable measures to draw such terms to the atten- tion of the other party, and, in the absence of such reasonable measures, it is not necessary for the party denying knowledge of such terms to prove either fraud, misrepresentation or non est factunt.,aa The burden of proof of a misrepresentation has thus been shifted away from the party who signed, to the proferens, who must now prove an effort was made to draw the exclusion clause to the signer's attention. "[T]he signer is bound by the terms of the document if, and only if, the other party believes on reasonable grounds that those terms truly express the signer's intention."33 30. Supra n. 6. 31. Supra n. 25. 32. Supra n.6, at 604. 32a. /bid., at 609 (emphasis added). See also Nikkei v. Standard Group Ltd. (1982), 16 Man. R. (2d) 71 (Q.B.); Crocker v. Sundance Northwest Resorts Ltd. (1983), 25 C.C.L.T. 201 (Ont. S.C.). 33. S.M. Waddams, Products Liability (2nd ed. 1980) 170. 19 84 C an LI ID oc s 14 3 NO. 1, 1984 EXCLUSION CLAUSES IN CONTRACT 141 C. Sequence of Operation The sequence of operation argument has also been used to find that an exemption clause was never incorporated into the contract. In Chapleton v. Barry U.D.C.,34 the plaintiff, a passenger in a cruise ship, rented one of a pile of deck chairs, paid, and was then given a ticket containing a clause disclaiming liability for personal injury. Mrs. Chapleton sat on the chair, fell through, and was injured. The Court of Appeal held that the clause was ineffective, as it had not formed part of the bargain. The offer of the chair had been accepted by the payment, and the terms on the ticket were just a futile attempt to modify an already existing contract.35 This argument was also used by Denning L.J., in Thornton v. Shoe Lane Parking,38 which involved a parking ticket dispensed by a machine. In that case, the argument may not have been applicable, for Thornton was to pay when he left the parking lot. Evidently, his Lordship recognized the possible difficulty, and held, alternately, that the clause exempting liability for injury was ineffective because of insufficient notice. The sequence of operation argument will fail also, if the court finds that the existence of the exemption clause was in the contemplation of the parties,37 or if it can be incorporated by a course of dealing; in other words, if it would not be unfair to include it in the contract. D. Collateral Terms There may be some collateral undertaking, separate and distinct from the main contract, which binds the proferens even though he has purported to exclude his liability. An example is in Couchman v. Hi11,38 which involved the sale of a heifer "with all faults". The seller made an oral representation that the heifer was unserved, but it was actually in calf, and soon died. It was held that there had been a collateral warranty to which the exclusion clause in the written contract did not apply. There have been several Canadian cases in which collateral undertak- ings have been found,38 but the Supreme Court of Canada decision in Hawrish v. Bank of Montreal40 casts some doubt on the doctrine. In its decision, the Supreme Court held that no collateral agreement is established when it is inconsistent with or contradicts the written agreement. In addition to the above, the English case of J. Evans & Son (Ports- mouth) Ltd. v. Andrea Merzario Ltd.41 causes further confusion in this area of the law, for it contains conflicting decisions on how to characterize oral representations.42 34. [1940] I K.B. 532 (C.A.). 35. It would be more in keeping with principles of offer and acceptance to hold that the display of chairs was merely an invitation to treat, and Mrs. Chapleton made the offer of payment. See Pharmaceutical Society of Great Britain v. Boots Cash Chemists (Southern) Ltd., [ 1953] I Q.B. 401 (C.A.). 36. Supra n. 20. 37. See for example, Evans Products Ltd. v. Crest Warehousing Ltd., [ 1979] 5 W.W.R. 385 (S.C.C.). 38. [ 1947] K.B. 554 (CA.). 39. See for example, Rose v. Barisko Bros. Ltd. (1981), 33 O.R. (2d) 685 (H.C.): Zien v. Field (1963), 43 W.W.R. 577 (B.C.C.A.). 40. [1969] S.C.R. 515. 41. [ 1976] 2 All. E.R. 930 (C.A.). 42. See generally: G.H.L. Fridman, "Written Contracts with an Oral Element" (1977), 8 Man. L.J. 383. 19 84 C an LI ID oc s 14 3 144 MANITOBA LAW JOURNAL VOL. 14 The doctrine of fundamental breach became generally accepted as rule of law in Canada as well as in England.61 There were some problems with the doctrine of fundamental breach, such as the question of what exactly constituted a fundamental breach. In Karsales,62 what was delivered to Wallis was completely useless as a car; it is easy to accept that as a fundamental breach. But in Charterhouse Credit v. Tolly,63a merely defective back axle was also held to be a fundamental breach. Canadian courts seemed to consider whether the innocent party had got what he bargained for in the contract,64 and whether the breach was flagrant.65 The innocent party, however, could never be really certain what the courts would interpret as a fundamental breach, and whether he had a right to repudiate the contract. It was also unclear how a fundamental breach would affect the con- tract. In Alexander v. Railway Executive66 Devlin L.J., said that a fundamental breach terminated the entire contract unless it were waived, as there could not be selective recission of only part of the contract.67 If the contract was re-affirmed, so was the exemption clause. This analysis was in direct conflict with Lord Denning's later judgment in Karsales,68 where he said that the party in fundamental breach was disentitled to rely on his exemption clause, while the remainder of the contract remained in effect. VI. Away from Fundamental Breach The swing away from fundamental breach began with Pearson L.J.'s decision in U.C.S. Finance v. National Mortgage Bank of Greece,69 which was adopted by the House of Lords in their landmark decision in Suisse Atlantique.70 Briefly, the facts of Suisse Atlantique are as follows: the respondents (charterers) had chartered a ship from the appellants for two years of consecutive voyages, to carry coal from the U.S.A. to Europe. In the contract was a clause providing for demurrage at $100 per day if the ship were delayed loading, or unloading, beyond a stipulated rate. The charterers apparently found it cheaper to pay demurrage than freight at the contract price (probably because of the fall in market freight rates after the re-opening of the Suez Canal in 1957) and the shipowners alleged that 61. See A.G. Guest, "Fundamental Breach of Contract" (1961), 77 L.Q.R. 98 at 98: "A party who has been guilty of a fundamental breach of contract cannot rely on an exemption clause inserted in the contract to protect him."; Yeoman Credit v. Apps, [ 1962] 2 Q.B. 508 (CA.); Charterhouse Credit Co. Ltd. v. Toffy, [1963] 2 Q.B. 683 (C.A.); Knowles v. Anchorage Holdings Co. (1964), 43 D.L.R. (2d) 300 (B.C.S.C.); Western Processing and Cold Storage v. Hamilton Construction Co. (1965), 51 W.W.R. 354 (Man. C.A.); Canadian-Dominion Leasing Corp. v. Suburban Superdrug Ltd. (1966), 56 D.L.R. (2d) 43 (Alta. C.A.). 62. Supra n. 59. 63. Supra n. 61. 64. See for example, Western Processing v. Hamilton Construction, supra n. 61; Green v. Holiday Chevrolet-Oldsmobile Ltd., [1975] 4 W.W.R. 445 (Man. C.A.). 65. See for example, Canadian-Dominion Leasing v. Suburban Superdrug, supra n. 61. 66. Supra n. 53. 67. See Tate and Lyle, supra n. 51. 68. Supra n. 59. 69. [ 1964] 1 Lloyd's Rep. 446 (C.A.) at 453. 70. Supra n. 4. See generally: G.H.L. Fridman, "The Effect of Exclusion Clauses" (1969), 7 Alta. L.R. 281. Note: the Austra- lian courts never really embraced the doctrine of fundamental breach as a rule of law. See Council of the City of Sydney v. West (1965), 114 C.L.R. 481 (Aust. H.C.) and the cases cited therein. 19 84 C an LI ID oc s 14 3 NO. 1, 1984 EXCLUSION CLAUSES IN CONTRACT 145 six to nine more voyages could have been made if the responsdents had not delayed loading and discharging the ship. They claimed damages for the extra freight they would have made, minus credit for demurrage payments received. In the House of Lords, the appellants alleged that the deliberate delays by the charterers constituted a fundamental breach, and disentitled them from relying on the demurrage provision. The appeal was dismissed, pri- marily because the contract gave the shipowners no right to any certain number of voyages, and any damage recoverable was limited by the demur- rage provision, which was an agreed damages clause, inserted for the protection of both parties, rather than an exclusion clause. Their Lordships went on to consider fundamental breach, even though the doctrine applied only to exclusion clauses, and not demurrage clauses. They were unanimous in holding that there was no substantive doctrine of fundamental breach; whether or not an exclusion clause covered a breach depends on its true construction. The decisions, unfortunately, are complex and hard to understand, and contain some ambiguities which were later used to reintroduce the doctrine of fundamental breach. Ambiguities in Lord Reid's speech seem to suggest that if an innocent party elects to affirm a contract upon a fundamental breach, whether an exemption clause covers the breach depends on construction. But, if the innocent party does not afirm, the entire contract is terminated, including the exemption clause. Denning L.J. immediately seized on the opportunity, and, in Harbutts "Plasticine" Ltd. v. Wayne Tank and Pump Co.," he re- instated fundamental breach as a rule of law. In that case, the defendants had installed new equipment in the plaintiffs factory to carry hot `plasti- cine'. The pipes used were made of `durapipe', which could not withstand the high temperatures of the liquid `plasticine'. The heat was left on all night to keep the `plasticine' flowing through the pipes, a fire broke out, and the plaintiffs factory was burned to the ground. It was found that the defendants were in fundamental breach of contract in supplying a material so unsuited for the purpose for which it was intended. The issue arose as to whether they could rely on the limitation of damages clause in their con- tract. Lord Denning held that they could not, interpreting Suisse Atlantiue72 as saying: It affirms the long line of cases in this court that when one party has been guilty of a fundamental breach of the contract, that is, a breach which goes to the very root of it, and the other side accepts it, so that the contract comes to an end — or if it comes to an end anyway by reason of the breach — then the guilty party cannot rely on an exception or limitation clause to escape from his liability for the breach." The result in Harbutt's clearly demonstrates the dangers of using the doctrine of fundamental breach to oust exemption clauses which the courts feel are unfair. In that case, there was no evidence the clause was harsh or 71. 119701 I Q.B. 447,11971A I All E.R. 225 (C.A.). 72. Supra n. 4. 73. Supra n. 71, at 235. 19 84 C an LI ID oc s 14 3 146 MANITOBA LAW JOURNAL VOL. 14 unconscionable. It was included so that the contracting parties knew exactly which risks were allocated to them, and each could obtain adequate insur- ance coverage. The plaintiffs insurer had been paid to assume the risk of loss by fire. Rather than control an unfair agreement, the result in Harbutt's was to shift the loss to the defendant or his insurer. Even though the proper terminology for exclusion of loss had been employed, as Reid L.J. in Suisse said was possible,74 the exclusion clause failed. Despite the apparent irre- concilability of the decision with that of Suisse Atlantique, Harbutt's was followed in a number of decisions.75 At least one Canadian court, however, refused to follow the decision blindly, preferring instead to uphold an appar- ently fair allocation of risk.76 A second ambiguity leaving the door open to the re-establishment of fundamental breach is also in Lord Reid's speech, where he distinguished between two different kinds of fundamental breach. Fundamental breach, he said, is either: (i) a performance totally different from that which the contract contemplates, (ii) a breach of contract more serious than one which would entitle [the innocent party] ... to refuse performance or further performance under the contract. There is in fact no necessary coincidence between the two kinds of (so-called fundamental) breach. For, though it may be true generally, if the contract contains a wide exceptions clause, that a breach sufficiently serious to take the case outside that clause, will also give the other party the right to refuse further performance, it is not the case, necessarily, that a breach of the latter character has the former consequence. An act which, apart from the exceptions clause, might be a breach sufficiently serious to justify refusal of further perform- ance, may be reduced in effect, or made not a breach at all, by the terms of the clause." Donaldson J., attempting to reconcile Suisse Atlantique and Harbutt's in Kenyon, Son & Craven Ltd. v. Baxter Hoare & Co. Ltd., interpreted Lord Wilberforce's speech as meaning that if: [P]erformance is non-contractual in the sense that it is totally different from that which the contract contemplated ... one can ignore the construction of the exception clause or treat it as inapplicable notwithstanding that, as a matter of construction, it covers the loss which has occurrred." According to Donaldson J., Wilberforce L.J. had meant that whether an exclusion clause covers a breach is normally a rule of construction, but becomes a rule of law in the case of a serious breach.79 The most common method of abrogating the principle enunciated in Suisse Atlantique was to pay lip service to the decision, and then strike 74. Supra n. 4, at 399. 75. See for example, Washes (Western) Ltd. v. Austins (Menswear) Ltd., [ 1976] I Lloyd's Rep. 14 (C.A.); Farnworth Finance Facilities Ltd. v. Attryde, [ 1970] 2 All. E.R. 774 (C.A.); Burlington Leasing v. De Moura (1975). 60 D.L.R. (3d) 71 (Ont. Co. Ct.). 76. Indio lndustires Ltd. v. Venture We//Services Ltd. (1975), 59 D.L.R. (3d) 458 (Alta. S.C. App. Div.). 77. Supra n. 4, at 431. 78. [1971] 1 W.L.R.519 at 531 (Q.B.). 79. See Cain v. Bird Chevrolet-Oldsmobile Lid. (1976), 12 O.R. (2d) 532 at 534 (H.C.) for a similar view expressed in a Canadian court. Lord Wilberforce, in Photo Productions, supra n. 2 at 561, described Donaldson J.'5 reasoning in Kenyon as a "contortion". 19 84 C an LI ID oc s 14 3 NO. 1, 1984 EXCLUSION CLAUSES IN CONTRACT 149 be applied to negligence."84 Unfortunately, little notice was taken of the provision that Securicor assumed responsibility for the negligence of their employees acting within the course of their employment. This was so, even though their Lordships, with the notable exception of Lord Diplock, assumed that had it not been for the exemption clause, Securicor would have been answerable for their employee's conduct. Why it was not felt that the fire had been started in the course of his employment was never discussed. Nor was any comment made on the extent to which the old rules of construction would remain applicable in the future. The extent to which Photo Productions is applicable in Canada is uncer- tain. One of the main reasons for the lenient approach to construction in that case was the passage of the Unfair Contract Terms Act,88 an act for which there is no equivalent in Canada. The U.C. T.A. prohibits certain types of exemption clauses, and others are subject to an overriding test of reason- ableness. Their Lordships found it significant that the entire field of contract law had not been legislated. They inferred that is was Parliament's intention to leave parties of equal bargaining power in commercial matters free to apportion risks as they see fit.96 It is clear, however, that their Lordships were also impressed by the commercial nature of the contract, the equality of bargaining power, the amount of risks against the remuneration, and the likelihood of insurance in these types of transactions.97 The Supreme Court of Canada, in Beaufort Realties (1964) Inc. v. Chomedy Aluminum Co. Ltd.,98 ostensibly adopted the reasoning of the House of Lords in Photo Production.99 Unfortunately, it failed to take advantage of an excellent opportunity to clarify the law as it stands in Canada, and state the extent which Photo Production is to be applied in this country. The facts of Beaufort are briefly that Beaufort Realities had retained Belcourt Construction to construct an apartment complex. Bel- court, in turn, subcontracted the aluminum windows, glass and glazing to Chomedy Aluminum. Belcourt was critical of Chomedy's work and with- held payment. After Chomedy made a number of requests for payment, which were denied, it withdrew from the job before completion. Belcourt hired another subcontractor to finish the work. By a clause in the contract between Belcourt and Chomedy, the latter had waived its rights to a lien on the property. Chomedy, notwithstanding that provision, filed a mechan- ic's lien against the property and issued a writ against Beaufort and Belcourt to recover for work done, and for a declaration that the lien was valid. At County Court, Fogarty J. held that Belcourt was in fundamental breach of contract by withholding payment, and, as Chomedy could consider the contract terminated, Belcourt could not take advantage of the waiver of 94. Supra n. 2, at 564. What effect this has on Levison v. Patent Steam Cleaning, supra n. 80 as authority is unclear, for in that case a similar argument was accepted as sound. Wilberforce L.J., however, commented on Levison as being sound "in light of well known principle" [supra n. 2, at 564]. 95. Supra n. 93. Hereinafter referred to as the U.C.T.A.. See infra. 96. Supra n. 2, at 289 (W.L.R.). 97. Supra n.2, at 564 (per Wilberforce L.J.): at 568 (per Diplock Li.); at 568 (per Salmon L.J.); at 570 (per Scarman L.J.). 98. [ 1980] 2 S.C.R. 718. 99. Supra n. 2. 19 84 C an LI ID oc s 14 3 150 MANITOBA LAW JOURNAL VOL. 14 lien, which was an exclusion clause. At Divisional Court, the majority (O'Leary J and Linden J.), following their earlier decision in Shill-Brand Inc. v. Belcourt Construction (Ottawa) Ltd.100 found that, although there was a fundamental breach, the waiver of lien was effective, and Chomedy was entitled only to a personal judgment. Chomedy appealed that decision to the Court of Appeal. Wilson J.A., in a judgment handed down before the House of Lords decision in Photo Production, affirmed that there had been a fundamental breach of contract by Belcourt. Following Suisse Atlantique101 and B.G. Linton Const. Ltd. v. C.N.R.,102 she held that whether the exclusion clause covered the breach was a question of construction of the contract. She continued on to ask "whether it is fair and reasonable that [the exclusion clause] survive the disintegration of its contractual setting."103 Wilson J.A. concluded that it was not fair and reasonable to attribute to the parties the intention that the waiver of lien would be binding even if Belcourt refused to pay, and overruled the clause as a `matter of construction', even though she never really referred to its actual wording. This construction of the clause is certainly a very harsh one. If it is to be assumed that the clause was not intended to operate when there was a genuine disagreement over the quality of work, it is difficult to imagine under what circumstances one could assume the parties did intend the clause to operate. The Supreme Court of Canada handed down their decision in 1980, having had the benefit of the House of Lords' decision in Photo Produc- tion.104 Ritchie J., in a judgment of the court, adopted the rule of construction approach to exclusion clauses enunciated in Photo Production. He quoted extensively from that case, and then, virtually without comment, adopted Madame Justice Wilson's decision that the waiver of lien clause, on its true construction, did not bind Chomedy. The main point of Photo Production, that the clear language of a contract between freely contracting parties should be respected, seems to have been ignored. Ritchie J. appears to adopt Wilson J.A.'s 'fair and reasonable' test, even though the Lords in Photo Production, especially Lord Diplock,105 clearly expressed their disfavor of such an approach. There is no comment on the extent to which the fair and reasonable test should be employed, if at all, or how the apparent conflict of the test with the decisions in Photo Production is to be resolved. Once again, lip service is paid to the principle that the intention of the contracting parties, as expressed by the clear words of the contract, is to be upheld. No actual construction of the actual terms is discussed, nor are any clear guide- lines for construction established. 100. (1978), 19 O.R. (2d) 606. 101. Supra n.4. 102. Supra n. 81. 103. Chomedy Aluminum Co. Lid. v. Belcourt Construction (Ottawa) Ltd. (1979), 24 O.R. (2d) I at 8. Note: The distinction drawn by Wilson J.A. between what is (air and reasonable within the contractual setting and after the disintegration of the contractual setting is really unjustified, for it ignores that the exclusion clause, as determinant of the secondary obligations, does not disintegrate upon a breach. See M.H. Ogilvie, "The Reception of Photo Production Ltd. v. Securicor Transport Ltd. in Canada: Nec Tamen Consumebatur" (1982), 27 McGill L.J. 424 at 437. 104. Supra n. 2. 105. Infra n.162. 19 84 C an LI ID oc s 14 3 NO. 1, 1984 EXCLUSION CLAUSES IN CONTRACT 151 While the old hostility towards exclusion clauses continues to surface in Canada under the guise of rules of construction, the British courts have gone even further than ever to allow parties of equal bargaining power to allocate risks as they see fit. Ailso Craig Fishing Co. v. Malvern Fishing Co.,'" like its predecessor, Photo Production, involved a security service contract with Securicor, this time in a Scottish harbor. Through Securicor's admitted negligence, a proper security patrol was not provided, and two vessels sank in the harbor, after the bow of one of the ships was `swabbed' under the pier. The issue before the House of Lords was whether a clause in Securicor's contract was effective in limiting the amount of damages for which Securicor was liable. The clause read: 'If, pursuant to the provisions set out herein, any liability on the part of the Company shall arise (whether under the express or implied terms of this Contract, or at Common Law, or in any other way) to the customer for any loss or damage of whatever nature arising out of or connected with the provision of, or purported provision of, or failure in provision of, the sevices covered by this Contract, such liability shall be limited to the payment by the Company by way of damages of a sum of £1,000 for any one claim, and £10,000 for any aggregate of claims which are the consequence of any one incident, or within a twelve month period.to6 Their Lordships felt that whether or not there had been a fundamental breach of contract by Securicor was unimportant,109 as it made no differ- ence to the construction of the limitation clause. The effect of a limitation clause is to be determined by construing it in the context of the contract as a whole. While the clause is to be construed contra proferentum, the court must not strive to create ambiguity, but must accord the words their plain, natural meaning."° Thus, the House of Lords has laid to rest for good (in England, at least) the 'rule of construction' that a disclaimer clause is to be construed as not applying to a fundamental breach. Next, their Lordships went on to add a principle, or guideline of con- struction, that a limitation of liability clause is not to be treated "with the same hostility as clauses of exclusion,"111 for it is more likely that a limi- tation clause reflects the true intention of the parties. While it is "inherently improbable" that the other party to a contract should intend that the pro- ferens completely escape liability that would otherwise fall to him, it is not so improbable that he would intend the liability of the proferens to be limited. This is especially so when the potential losses are so great in pro- portion to the remuneration he receives, and the other party has better opportunity to insure."2 This attempt to establish guidelines for future construction of disclai- mer clauses, rather than clarifying the principles enunciated in Photo 106. Supra n. 9 (H.L.). 107. Ibid.. at 103. 108. Ibid., at 103-104. 109. Ibid.. at 103 (per Wilberforce LJ ); at 106 (per Fraser L.1.). 110. /bid., at 102. III. Ibid., at 102-3. 112. Ibid., at 102-3. 105-6. 19 84 C an LI ID oc s 14 3 154 MANITOBA LAW JOURNAL VOL. 14 of a car which states, "The vendor does not guarantee the car will be blue," does not operate to provide a defence to the vendor for failure to deliver a blue car. Rather, it means that the vendor has not assumed an obligation to deliver a blue car. The exclusion clause has a substantive function; it defines and modifies the primary obligation of the contract. Some may argue that the exclusion clause is, by its very nature, decep- tive; a consumer reading the contract would see a promise for the delivery of a blue car, and believe that promise is a contractual obligation. However, a consumer understands a contractual obligation to be a promise that is enforceable. If he read the clause he would understand that the promise for a blue car is unenforceable, and therefore non-contractual.122 The common law doctrines, such as the notice requirement and contra proferentum, answer the objections that exclusion clauses may not be read, or are difficult to understand. The adoption of the view that exclusion clauses have a sub- stantive function in defining contractual obligation would not, it is submitted, have a deleterious effect on the effectiveness of these doctrines. As well, statute prohibits the exclusion of certain warranties and conditions in con- sumer sales, and further controls over unfair clauses, would be possible through the adoption of the Ontario Law Reform Commission's and U.L.C.'s recommendations that a general unconscionability provision be adopted. As noted earlier,123 certain members of the judiciary have begun to endorse a substantive view of the function of exclusion clauses.124 At the same time, however, the spectre of fundamental breach has once again risen. If exclusion clauses do not operate so as to define the extent of contractual obligations, the argument goes, a clause could be worded so as to prevent any obligation from ever arising, and the contract would fail for lack of consideration. Thus, a total exclusion may not be possible. Lord Wilber- force, in Suisse Atlantique,125 states that an act which, without the presence of the exclusion clause might constitute a breach, "may be reduced in effect, or made not a breach at all, by the terms of the [exclusion] clause".126 He goes on to warn that the contractual promises must not be reduced to a "mere declaration of intent."127 Similarly, in his analysis of contractual obligations in Photo Productions, Lord Diplock points out that while prom- isors may use exclusion clauses to modify their primary obligations under the contract, they must do so "within the limits that the agreement must retain the legal characteristics of a contract";128 i.e. there must be some consideration.128 122. Sec B. Coote. supra n. I. at 140-144. 123. Supra n.114;n.103. 124. See Photo Production Ltd. v. Securicor Transport Ltd., supra n. 2 (per Diplock L.J); Suisse Atlantique, supra n. 4, at 433 (per Wilberforce L.J.); Wathes (Western) Ltd. v. Austin Menswear Ltd., supra n. 75; Levision v. Patent Steam Carpet Cleaning Co., supra n. 80; The Angelia, ] 1973] 2 All E.R. 144 at 162-3 (Q.B.): Thomas National Transport (Melbourne) Ply. Ltd. v. May and Baker (Aust.) Ply. Ltd. (1966). 115 C.L.R. 353 at 385-6 (H.C. Aust.); Council of the City of Sydney v. West, supra n. 70 at 493-6 (per Kitta J.). 125. Supra n. 4. 126. /bid.. at 431. 127. /bid., at 432. 128. Supra n. 2. at 567. 129. See Firestone Tyre & Rubber Co. v. Vokins & Co.. (1951 ] 1 Lloyd's Rep. 32 at 38-9 (K.B.) (per Devlin J.); Fridman, "The Effect of Exclusion Clauses", supra n. 70. 19 84 C an LI ID oc s 14 3 NO. 1, 1984 EXCLUSION CLAUSES IN CONTRACT 155 It is indeed possible that an exclusion clause which purports to com- pletely exclude the promisor's liability for non-performance might be declared void as repugnant to the main purpose of the contract.'" However, it has been suggested that if the clause were phrased so that it relieved the promisor from any duty to perform, the effect, rather than to render the contract void for uncertainty, would be to simply transform what would otherwise be a bilateral contract into a unilateral contract. The promisor has no obligation to do anything under such a contract, but if he does render the specified performance, the promisee has an obligation to pay, or to perform his part of the bargain.131 IX. Practical Considerations Throughout the summer of 1983, a number of lawyers and business- persons were surveyed in order to determine how often, and for what reason, exclusion clauses are used in the business community. In all, the study included 30 businesspersons and lawyers (including some in-house legal counsel) in the Winnipeg area. Twelve of the businesses whose represen- tatives were interviewed could be classified as commercial enterprises, dealing generally with other businesses, as opposed to the general public. This group included security companies, engineering firms and consultants, and whole- salers/manufacturers. Seven of the businesses were consumer operations, dealing mainly with the public — mostly dry cleaners and gymnasiums or health studios. The remaining businesses deal with both commercial and consumer clients. They include retail sales and service outlets, and courier services. A. Commercial Operations All of the businesses surveyed agree that when one company is dealing with another, any exclusion clauses in their contract are part of the bargain. They are generally viewed as a method of allocation of risk. Whether exclu- sion clauses are used at all in a commercial context depends on a number of factors. One major determinant is the standards in the industry. Engi- neering firms generally make no attempt to exclude liability for negligence; as professionals, their reputations are at stake. Security companies all use some form of exclusion clause to protect against liability for the negligence of their employees. The rationale given is that if security companies were forced to become insurers, their prices would skyrocket. It is less expensive for the customer to insure his property himself. Equally important is the relative bargaining positions of the parties to the contract. Firms submitting bids are generally in no position to use the clauses. The bid risks being rejected, as no one else is likely to have included such a term. Especially in tough economic times, it is a buyer's market. As one manufacturer said, "They're in the driver's seat." The customer can demand larger warranties on his purchase, for he knows that a number of 130. See Sze Hai Tong Bank Ltd. v. Rambler Cycle Co. Ltd., [ 1959] A.C. 576 (P.C.). 131. See United Dominion Trust (Commercial) Ltd. v. Eagle Aircraft Services Lid., [ 1968] 1 W.L.R. 74, (1968] I All E.R. 104 (C.A.). See also N.E. Palmer and A. Evans, "Commentary" (1980), 58 C.B.R. 773 at 777; D. Yates, supra n. 1. 19 84 C an LI ID oc s 14 3 156 MANITOBA LAW JOURNAL VOL. 14 firms are anxious to have his business. However, when there are more guarantees and fewer exclusion clauses, the price to the customer will increase. Almost all businesses surveyed use force majeure clauses, exempting them from liability for events beyond their control. The next most common type of clause is clauses limiting time in which a remedy could be sought, or limitations of damages clauses. Most businesses are reluctant to attempt a total exclusion of liability, or to exclude liability for negligence or funda- mental breach, for fear that customers would be scared off. Such clauses are not considered commercially credible. However, many of the limitation of damages clauses, often referred to in the contract as `liquidated damages clauses', purport to limit liability to an amount so negligible that they are essentially no different than total exclusions. This is most common with security contracts, where liability may be limited to as little as $50.00 or even less. There are three major reasons commercial businesses give for using exclusion clauses: (1) They should not be liable for consequential damages; the cost of their service is low, and they cannot afford to be insurers of their clients' property. A common statement is that if the consumer wants a better guarantee, he has to pay higher prices. [At least one security company offers different `grades' of guards, at varying prices. The limitation of lia- bility, however, does not vary!] Most security services feel it is up to the customer to obtain insurance. One company representative made the point that the amount a client saves on their insurance premiums by having security often covers the charge of the security service. The security com- panies cannot themselves insure their clients, all they can do is provide a `reasonable deterrrent', he declared. (2) The clauses are standard in the industry; the fact that `everyone else uses them' is a very common reason businesses give for using exclusion clauses. Companies will often pick up a competitor's contract and use it as their own, without really knowing what it means. In the businesses surveyed, three unrelated courier services had almost identical exclusion clauses. As well, lawyers keep precedents, and may use the same kinds of clauses, including exclusions, for a number of clients. (3) A final reason is to avoid litigation. All of the businesses sur- veyed were anxious to avoid having to go to court, which is a costly process, and terrible for public relations. A lot of time, money and effort is spent drafting clauses to make very clear the exact extent of the obligations they are willing to assume under the contract, and the limits of liability. Every- thing that could possibly go wrong is considered, and a carefully drafted clause is inserted in the contract. Considering this enormous effort, it is surprising that a large number of businesses, especially couriers, are willing to accept their client's bills of lading, or purchase orders, thereby risking losing the protection afforded by their own contract. When this risk was pointed out, the reaction was invariably one of surprise — the problem had not been considered by the companies. Gen- erally, they thought that as the customer knew the terms on which the company was willing to contract, there should be no problem. That argu- 19 84 C an LI ID oc s 14 3 NO. 1, 1984 EXCLUSION CLAUSES IN CONTRACT 159 The general test of reasonableness is set out in s.11(1) of the U.C.T.A.: ... [T]he requirement of reasonableness ... is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were, or ought reasonably to have been, known to or in the contemplation of the parties when the contract was made. The test is rather subjective and uncertain, as there are no guidelines set out for its application by the court. However, ss.6(3) and 7(3), dealing with exclusion or restriction of implied terms in non-consumer sales and hire- purchase of goods, and analogous transactions, along with s.4, dealing with indemnity clauses by consumers, are subject to a special test of reasonable- ness, in addition to the general test of s.11(1). The criteria of the special test deal with such things as the relative strength of bargaining power, availability of the goods from alternate sources, and whether the goods were specially-made for the purchaser. B. Canada' 39 Canada has no existing legislation similar in scope to the U.C. T.A. 1977, but three provinces, Ontario, British Columbia and Alberta, have enacted some form of fair trade practices legislation.140 These statutes prohibit unfair practices in consumer transactions, and give non-exhaustive lists of acts which may be considered unfair or unconscionable.141 The general trend in legislating against exemption clauses has been to prohibit the exclusion of terms which would otherwise be implied by the Sale of Goods Act of the province, or other relevant legislation. For example, the Ontario Consumer Protection Act142 prohibits exemption from terms implied by the Sale of Goods Act143 such as implied warranties of fitness and merchantability, as does the Nova Scotia Consumer Protection Act,' 44 the B.C. Amendment to the Sale of Goods Act,145 the Manitoba Consumer Protection Act,148 the New Brunswick Consumer Product Warranty and Liability Act,147 and similar legislation in other provinces and territories. The protection against unfair exclusion clauses afforded by these enact- ments is far from complete, however, and varies considerably from province to province. For example, the Ontario Act does not apply to non-business associations, including charitable organizations, who may need its protec- tion as badly as any consumer. Goods not purchased for the consumer's own consumption or use are not covered, such as goods one may purchase for a friend.148 Only sales of goods are covered, to the exclusion of leases 139. See S.M. Waddams, The Law of Contracts (1977) 291-303 for a general review and criticism of existing legislation. 140. Trade Practice Act, R.S.B.C. 1979, c.406, esp. ss. 3, 4; Business Practices Act, R.S.O. 1980, c.55, esp. ss. 2, 4; Unfair Trade Practices Act, R.S.A. 1980, c.U3, esp. s.4. 141. See generally: E.P. Belobaba, "Unfair Trade Practices Legislation: Symbolism and Substance in Consumer Protection" (1977), 15 Osgoode Hall L.J. 327. 142. R.S.O. 1970, c. 82. 143. R.S.O. 1980, c.462. 144. R.S.N.S. 1967, c.53. 145. R.S.B.C. 1960. c.344, as am. by S.B.C. 1971, c.52, s.l. 146. R.S.M. 1970, c. C200, esp. s.58(1). 147. R.S.N.B. 1983, c. C18.1, esp. ss. 2, 24-26. 148. R.S.O. 1970, c. 82, s.l (a). 19 84 C an LI ID oc s 14 3 160 MANITOBA LAW JOURNAL VOL. 14 and analogous transactions, and only written, not oral, exemption clauses are prohibited. The Manitoba Act sets a monetary limit of $25,000 on transactions covered by the Act so that a consumer making a large pur- chase, such as a boat or motorhome, may not be covered when he needs the protection the most. There have been recommendations by the Ontario Law Reform Commission149and by the Uniform Law Conference160 that a general, unex- cludable unconscionability provision be introduced in a uniform Canadian Sale of Goods Act, and that such a provision not be restricted to consumer transactions. Certain exclusion clauses, especially in consumer transactions, would be altogether prohibited, and, generally in non-consumer transac- tions, other exclusion clauses would be subject to the overriding test of unconscionability. C. United States The recommended Canadian unconscionability provision is modelled on section 2-302, in Article 2 (Sale of Goods) of the American Uniform Commercial Code:151 (I) If the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result. This provision has been adopted in the U.C.C. of every state except Cali- fornia, where it has been included in the Civil Code Amendment of 1979 (s. 1670.5), and made applicable to contracts generally, rather than just sales contracts. The provision enables the court to police agreements it deems harsh and inequitable directly, without having to resort to awkward common law methods outlined earlier in this essay. Section 2-719 of the U.C.C.152 allows parties to a contract to modify or exclude remedies for breach, subject to an overriding test of unconscion- ability. As a guideline, it states that: "Limitation of consequential damages for injury to the person in the case of consumer goods is prima facie uncon- scionable but limitation of damages where the loss is commercial is not."153 The choice of words here is perhaps unfortunate, for what exactly consti- tutes a commercial loss is not clear. The O.L.R.C. recommends that, in a Canadian act, such loss be termed `economic loss'. The U.L.C. is of the view that it is unnecessary to say economic losses are not prima facie uncon- scionable, as the burden of proof is already on the party averring unconscionability. The U.C.C. provision is, on its face, limited to disclaimers 149. Ontario Law Reform Commission, Report on the Sale of Goods (Toronto: Ministry of the Attorney General, 1979). 150. Uniform Law Conference, Uniform Sale of Goods Act and Report (Canada: The Conference, 1981). 151. Supra n. 132. 152. Adopted by all states, with slight modifications by Alabama, California, Vermont and Washington. 153. Supra n. 132, at s.2-719(3). 19 84 C an LI ID oc s 14 3 NO. 1, 1984 EXCLUSION CLAUSES IN CONTRACT 161 of consequential damages, but, by s.2-302, all limits of remedies clauses are subject to a general unconscionability review. Both the O.L.R.C. and U.L.C. recommend specifically extending the provision in a Canadian act to limi- tation or exclusion of warranty and remedies of any sort.164 XI. A Doctrine of Unconscionability Various methods have been used by the courts in their attempts to prevent unfair or unconscionable exclusion clauses from having effect. The clauses are strictly construed, and interpreted contra proferentem. Suffi- cient notice is required; a collateral representation may not be covered by the exemption clause; a clause could not cover a fundamental breach. Dis- guising the real policy reasons behind principles of construction has, in itself, produced unfair results, and the principles have become distorted and unre- liable. The doctrine of fundamental breach is far too coarse an instrument to use in dealing with unconscionability in contracts. It is on one hand too wide, striking down clauses which, in their commercial context, are per- fectly fair and reasonable;155 and, on the other hand, too narrow, for it applies only to exclusion clauses, while other equally unconscionable terms go untouched.156 Certain types of exclusions are prohibited by statute and there are some isolated attacks on unconscionable transactions,'" but no general legislation provision against unconscionability in contracts has yet been enacted in Canada. Such legislation is both desirable and necessary. The adoption of recommendations of the O.L.R.C. and the U.L.C. regarding a uniform Sale of Goods Act would certainly be a move forward, but an act dealing only with exclusion clauses in sales and analagous transactions is not sufficient. Many terms which are not exclusion clauses are unconscionable, and many unconscionable provisions are used in transactions other than the sale of goods. It might be argued, that a general legislative principle against uncon- scionability is unnecessary, for such a principle already exists at common law. As early as 1750, in Earl of Chesterfield v. Janssen,158 the Lord Chan- cellor declared that the court would not enforce any contract so "contrary to conscience ... such as no man in his senses and not under delusion would make on the one hand, and as no honest and fair man would accept on the other".159 American courts have held that the doctrine of unconscionability is "sufficiently grounded in the common law to be extended" to non-sale transactions outside the scope of U.C.C. s. 2-302.1fi0 In a number of deci- 154. It is interesting to note that, even though the jury system is used in the States extensively, the question of unconscionability is one of law, and therefore left to the judge. This has been criticized as yielding poor and unrealistic results. See D.R. Price. "The Conscience of Judge and Jury: Statutory Unconscionability as a Mixed Question of Law and Fact" (1981), 54 Temple L.Q. 743. 155. See for example, Canso Chemicals, supra n. 82; Harbutt's "Plasticine", supra n. 71. 156. See for example, Bala v. City Parking Can. Ltd. (1973), 2 O.R. (2d) 446, 43 D.L.R. (3d) 190 (C.A.). 157. See for example, Unconscionable Transactions Relief Act, R.S.M. 1970, c. U20. 158. (1750), 28 E.R. 82 at 100. 159. See also Samuel v. Newbold, [ 19061 A.C. 461 (H.L.). 160. See Cronk v. State, 100 Misc. (2d) 680 (1979), 420 N.Y.S. (2d) 113; Weidman v. Tomaselli, 81 Misc. (2d) 328 (1975), 365 N.Y.S. (2d) 681; A.L. Corbin, Contracts (1950) 128. 19 84 C an LI ID oc s 14 3