Validity of Exclusion Clauses in Contract Law

If you are involved in a contract dispute, you should seek legal advice. The information in this fact sheet is intended for informational purposes only and should not be taken as legal advice.

Exclusion clauses are terms in a contract that prevent a party being held liable for certain occurrences. For example, when you purchase a parking ticket for a car park it is likely there will be terms and conditions on the back of the ticket that will include exclusion clauses.

For an exclusion clause to be valid it must be:

  • Properly incorporated in the contract through notice;
  • Legal; and
  • If the clause relates to negligence, it must be completely clear.

Properly Incorporated Through Notice

The exclusion clause must be shown before the contract is made with appropriate notice (actual or constructive). Taking the car park ticket example, the terms and conditions on the back of the ticket that include exclusion clauses are not valid. This is because the exclusion clause is only brought to the notice of the purchaser after the purchase. To be valid in this case, the exclusion clauses should be on signs that the driver sees before purchasing the ticket: Thornton v Shoe Lane Parking Ltd (1971) 1 All ER 686.


The Competition and Consumer Act 2010 (Cth) protects Australian consumers from misleading and deceptive conduct. If an exclusion clause aims to protect a party from being held liable for misleading and deceptive conduct, it will be invalid as this is not legal.


An exclusion clause that protects a party from being held liable for negligence will only be valid if the clause is absolutely clear that its intention is to protect the party from negligence. A court will always interpret an unclear or ambiguous exclusion clause against the party who is relying on it. If you are facing a dispute over a contract, please contact D’Angelo Legal on 9381 1147 or to obtain advice.