Enforceability of exemption clauses in construction contracts: A comparative study of approaches in England and Australia

Exemption clauses are commonly provided in contracts by parties in the construction industry in an attempt to limit their liability for loss or exclude such liability altogether. The operation of exemption clauses in a legal context, however, has proved to have been fraught with great difficulties in both England and Australia. This paper seeks to address the question, “How does the enforcement of exemption clauses under Australian Law differ from the law of England?” A doctrinal legal research approach is used to establish the legal rules relating to the enforceability of exemption clauses in England and Australia. Once established, these rules are then compared and contrasted. The research found that, although the relevant law in both jurisdictions shared a common origin (the traditional English common law), there are now significant differences. These differences are primarily due to statutory regulation of exemption clauses introduced into England but not Australia, and the development and divergence of the Australian common law with respect to interpretation of exemption clauses. This paper provides a useful summary of the law pertaining to exemption clauses and, as such, will be of interest to construction and legal professionals and academics. The comparison of the law between England and Australia with respect to exemption clauses highlights an important debate as to whether freedom to contract should be regulated in commercial contracts.