Exemption and exegesis: Judicial interpretation of exemption clauses in England, Australia, and India

Abstract

A feature of the modern consumer economy is the so-called “standard form contract,” printed in advance to establish the terms on which a corporate supplier deals with its customers. Typically these terms include an “exemption clause,” seeking to limit the supplier’s liability for loss or damage, and often to exclude legal liability altogether. Sometimes such clauses are given effect according to their apparent intention, but in other cases judges may endeavor to avoid that result – either by denying the clause any legal effect whatsoever, or by reading it so as not to apply to the precise kind of liability that has in fact arisen. We illustrate these varied responses by reference to judicial decisions in England, Australia, and India. The analysis suggests different expectations within these different judicial discourse communities: in England, from 1980 onwards, the renewed ideological emphasis on freedom of contract led judges to retreat from the creative solutions of earlier decades, returning to an emphasis on the actual words of such clauses; in Australia, in contrast, judges declined to take part in such a retreat; in India, a prevailing insistence on the need to interpret contracts strictly according to their literal terms has failed to prevent occasional attempts at ingenious interpretive solutions.