Limits on the Operation of Exclusion Clauses

This article discusses exclusion clauses and instances when a court should intervene to limit the operation of such clauses. The author argues that exclusion clauses which are used improperly have the potential to damage the nature of contract by undermining the transfer or creation of rights under the contract. More specifically, the author discusses that exclusion clauses may eliminate obligations owed under the contract or absolve one party from liability completely. The author further argues that exclusion clauses allow for the unilateral alteration of the allocation of risk under a contract. In discussing these issues, the author makes reference to Canadian case law, particularly the Supreme Court of Canada’s views on appropriate limits on enforcement of exclusion clauses. In conclusion, the author considers the validity of public policy as a rationale to address the various problems created by exclusion causes.