An exemption clause is a specific type of clause used in a contract to exclude or limit liability in the event of a breach of contract. The clause may be used for reliance, if it has been incorporated into the contract and, with reference to interpretation, if it is extended to the breach in question; If the previous two points are corroborated, the validity of the clause is tested under the Unfair Contract Terms Act 1977 and the Unfair Terms in Consumer Contracts Regulations 1999. In our specific scenario, the following clause is mentioned: “Electric Motors Ltd limits its liability for any violation. implied terms of arts. 13-14 of the Sale of Goods Act 1979 at £500. it costs the company a lot of money. Incorporation To proceed in order, it is first necessary to consider incorporation; the party wishing to rely on the exclusion clause must demonstrate that it is a clause of the contract. Problems in this regard normally arise because often there is not a good knowledge of all the clauses; it often happens that a contract is signed without real knowledge of its content. Given the specific type of clauses discussed here, they may be incorporated by signature, by notice or by transaction. To be incorporated, clauses must be introduced before a contract is concluded and the leading case in this area is Olley; furthermore, generally, the terms of an unsigned document are incorporated if there is sufficient notice, in the Parker case this specific question arises: the term is valid if there has been reasonably sufficient notice. In the Ethical Co case there is no... ... middle of paper ......g power as stated by the House of Lords in Photo Production Ltd. In the Mitchell Ltd case it was made clear that exemption clauses can be used to avoid having to pay for insurance against the risk of damages. The fairness test is defined, in turn, in UTCR 1999, Reg. 5 (1): “A contractual term which has not been negotiated individually is considered unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the rights and obligations of the parties arising from the contract, in relation to to the detriment of the consumer. »In my view, Ethical Co, as a company under section 6 of UCTA 1977, would not be able to obtain compensation; if we rely instead on Reg. 3 of UTCR 1999 and therefore of Reg. 5 (1) might be able to prove their status as a consumer in the transaction and thus obtain compensation exceeding the limit of 500 £..