Your Cart
uollb first class law notes

Nature of Exclusion and Limitation Clauses in Contract Law

In Contract Law, exclusion and limitation clauses are contractual provisions that define the extent to which one party may exclude or limit their liability for certain types of losses, damages, or obligations. These clauses are often included in contracts to allocate and manage risk between the parties involved.

Risk allocation: Exclusion and limitation clauses aim to allocate risk between the parties by determining who will be responsible for certain types of losses or damages. They allow parties to define the scope of their liabilities and protect themselves from excessive or unforeseen risks.

Unilateral protection: Exclusion and limitation clauses are typically inserted by one party (usually the party with more bargaining power) into the contract. The purpose is to shield that party from liability in specific circumstances.

Types of clauses: Exclusion clauses exclude liability entirely, while limitation clauses seek to limit the amount of liability. Exclusion clauses aim to prevent any claims arising from certain events or circumstances, whereas limitation clauses establish a cap on the amount of liability that can be claimed.

Reasonableness: In many jurisdictions, including common law countries like the United Kingdom, there are statutory provisions that regulate the enforceability of exclusion and limitation clauses. These provisions often require such clauses to be reasonable and clear to be enforceable. The reasonableness test typically considers factors such as the parties' bargaining power, the nature of the contract, and public policy.

Unfair contract terms: In some jurisdictions, legislation exists to protect consumers or parties with weaker bargaining positions from unfair exclusion or limitation clauses. These laws may render certain types of clauses unenforceable or subject them to stricter scrutiny.

Contra proferentem rule: In case of ambiguity or uncertainty in the interpretation of an exclusion or limitation clause, the contra proferentem rule may apply. This rule states that any ambiguity should be interpreted against the party seeking to rely on the clause. In other words, if the clause is unclear, it will be interpreted in favour of the party that did not draft it.

In short, exclusion and limitation clauses serve to allocate risk and liability between the parties involved by specifying certain circumstances under which one party may be excluded from or have their liability limited for certain types of losses, damages, or obligations.

You can learn more about this topic and relevant case law with our Contract Law notes.

Trusted by thousands of law students worldwide

Where are our students from?

Yale University

Council of Europe

Baker Mckenzie 

University of Chicago

Columbia University

New York University

University of Michigan 


University College London (UCL)

London School of Economics (LSE)

King’s College London (KCL)

University of London

University of Manchester

University of Zurich

University of York

Brandeis University

University of Exeter

University of Sheffield

Boston University

University of Washington

University of Leeds

University of Law

Royal Holloway, University of London 

Birkbeck, University of London

SOAS, University of London

University of Kent

University of Hull

Queen’s University Belfast

Toronto Metropolitan University

Hong Kong University of Science and Technology

Your perfect companion for open-book and closed-book exams

Diagrams and Charts

Our carefully designed diagrams and charts will guide you through complex legal issues.

Clear and Succinct Definitions

Key concepts are concisely defined to help you understand legal topics quickly.

Statutory Provisions

Statutory provisions are provided side by side with legal concepts to help you swiftly locate the relevant legislation.

Case Summaries

We have summarised important cases for you so that you don't need to read long and boring cases.

Rules and Exceptions

Rules and exceptions are clearly listed so that you know when a rule applies and when it doesn't.


Legal terms and key concepts are explained at the beginning of each chapter to help you learn efficiently.

Case Law

Case law is provided side by side with legal concepts so that you know how legal principles and precedents were established.

Law Essay Guide

You will learn essential law exam skills and essay writing techniques that are not taught in class.

Problem Question Guide

We will show you how to answer problem questions step by step to achieve first-class results.

Structured Explanations

Complex legal concepts are broken down into concise and digestible bullet point explanations.

Legal Research

You will learn legal research techniques with our study guide and become a proficient legal researcher.


All essential concepts, principles, and case law are included so that you can answer exam questions quickly.