Contents

Introduction.................................................................................................................................................. 2

What are Exclusion Clauses? .............................................................................................................. 2

How an exclusion clause operates? .................................................................................................... 3

Protection provided for business-to-consumer contracts against unfair exclusion clauses under

the Consumer Protection (Amendment) Act 2010 ................................................................................ 4

Unprotected areas against unfair exclusion clauses ........................................................................ 5

Comparison between relevant laws on exclusion clauses in Malaysian and English Law ............. 6

English law on exclusion clauses as provided under the Consumer Rights Act 2015 ................ 6
Introduction

This paper aims to examine and analyze whether the Consumer Protection (Amendment)

Act 20101 (CPA) bestow adequate protection to business-to-consumer contracts against

unjust exclusion clauses. The first part of this paper will define and disclose what

exclusion clauses are. The second part of this paper will discuss the protection provided

for business-to-consumer contracts against unfair exclusion clauses under the CPA. In

addition, this part of the paper will go into detail on key sections in the CPA and

unprotected areas against unfair exclusion clauses. The third part of this paper will

compare relevant laws on exclusion clauses between Malaysian and English Law

alongside relevent judicial decisions. Lastly, this paper will conclude with suggestions to

reform the current laws.

What are Exclusion Clauses?

An exclusion clause is a term in a contract purporting to exclude or restrict the liability in

a contract for breach of obligation of one of the parties in specified circumstances.

When successfully established, an exclusion clause excludes a person completely and

absolutely from liability. In contract, parties will seek to exclude their liability for breach

of contract by including exclusion or exemption clauses in the contact. Exclusion

clauses were developed and hold in check by both common law and statute. This is to

deal with disproportion in bargaining power between parties. 2

1
Consumer Protection (Amendment) Act 2010
2
Richard Stone
How an exclusion clause operates?
When it comes to how an exclusion clause work in a contract, two main rules have to be

present3. Namely:

 Rule of Incorporation

This rule examines whether the exclusion clause was part of the contract or not.

Also, this rule applies to both signed and unsigned documents. For signed

documents, failure to read the contract is not a defense. Moreover, the element of

time is put forward and becomes important when it comes to unsigned documents.

In addition, reasonable notice has to be present

 Rule of Construction

This rule looks into how the court construed and define the exclusion whether it

covers the terms. This rule is used as a means of limiting the effect of exclusion

clauses and a person wishing to avoid liability is required to be precise in the use

of language to achieve that aim.

Element 1 to Construction is the strict interpretation of words. Courts will not allow

an exemption that is wider that what is stated in the contract. Hence, words of an

exclusion clause must be without ambiguity. Element 2 to Construction is the

Contra Proferentem rule. This Latin maxim means against the one putting it forth,

therefore, the exclusion clause put forth are defined not in favor of the party relying

on it4.

3
Gary D Young, 'Exclusion Or Exemption Clauses' [2013] Their Nature, Interpretation and Enforceability
<https://library.lawsociety.sk.ca/inmagicgenie/documentfolder/FOCCL3.PDF> accessed 7 February 2019.
4
(Uk.practicallaw.thomsonreuters.com, 2019) <https://uk.practicallaw.thomsonreuters.com/4-383-
2653?transitionType=Default&contextData=(sc.Default)&firstPage=true&comp=pluk&bhcp=1> accessed 7 March
2019.
Protection provided for business-to-consumer contracts against unfair exclusion clauses

under the Consumer Protection (Amendment) Act 2010

Malaysia did not have specific legislation governing unfair contract terms between

businesses and consumers, unlike the United Kingdom and other commonwealth

countries such as Singapore, until the Consumer Protection (Amendment) Act 2010

introduced Part IIIA to the CPA 1999. Section 24D of the CPA sheds light on exclusion

clauses5.

Section 24D of the CPA states that:

A contract or a term of a contract is substantively unfair if the contract or the term

of the contract—

(a) is in itself harsh;

(b) is oppressive;

(c) is unconscionable;

(d) excludes or restricts liability for negligence; or

(e) excludes or restricts liability for breach of express or implied terms of the

contract without adequate justification.

Section 24D defines what contractual term can be considered unfair and Section 24D

(2) also lays out a list of consideration that the court will take into account when

considering whether or not the term really is unfair.

5
Addah Jaffri, 'Exemption Clause' Is it a ticket for a contracting party to be excluded from liabilities?
<https://www.academia.edu/19353957/EXEMPTION_CLAUSE?auto=download> accessed 7 March 2019.
If the court decides that that term/clause in your contract is unfair, then section 24G allows

them to consider that the term is void. As a point of interest, Section 24D doesn’t only

apply to exclusion clauses but any clause that could potentially be unfair.

In addition, Part IIIA arguably applies to other unfair terms particularly in the form of

exemption clauses that can be found or printed in the receipts, notices, invoices and other

sale documents based on the broad meaning of 'a contract' and 'a term of a contract.'

Section 24A provides that 'contract' has the same meaning as assigned to it in Section

2 of the Contract Act 1950.

Section 24E of the CPA also mentions on the aspect of burden of proof. If a contract or

a term of a contract excludes or restricts liability, or excludes rights, duties and liabilities,

it is for the supplier relying on such exclusion or restriction to prove that it is not without

adequate justification6.

Unprotected areas against unfair exclusion clauses

6
Comparison between relevant laws on exclusion clauses in Malaysian and English Law
Malaysian Law
Definition of unfair A term that has resulted in
exclusion clauses an unjust advantage to the
supplier or unjust
disadvantage to the
consumer on account of
the conduct of the supplier
or the manner in which or
circumstances under which
the contract or the term of
the contract has been
entered into or has been
arrived at by the consumer
and supplier
Exclusion for negligence No exclusion as stated in
24D (d) of the CPA
Burden of proof A contract or a term of a
contract excludes or
restricts liability, or
excludes rights, duties and
liabilities, it is for the
supplier relying on such
exclusion or restriction to
prove that it is not without
adequate justification
English law on exclusion clauses as provided under the Consumer Rights Act 2015
English Law
inappropriately excluding
or limiting the legal rights
of the consumer in relation
to the trader or another
party in the event of total
or partial non-performance
or inadequate performance
by the trader of any of the
contractual obligations,
including the option of
offsetting a debt owed to
the trader against any
claim which the consumer
may have against the
trader
No exclusion as stated in
65(1) of the CRA
A term of a consumer
contract must be regarded
as unfair if it has the effect
that the consumer bears
the burden of proof with
respect to compliance by a
distance supplier or an
intermediary with an
obligation under any
enactment