EXEMPTION (OR EXCLUSION) CLAUSES
In the case of Fraser Jewellers (1982) Ltd. v. Dominion Electric Protection Co., (1997), 34 O.R. (3d) 1 (Ont. C.A.). the Ontario Court of Appeal found the exclusion clause in question to be enforceable. In this case, a contract between a jeweller and a security company contained the following clause:
It is understood that ADT is not an insurer, that insurance, if any, shall be obtained by the customer and that the amounts payable to ADT hereunder are based upon the value of the services and the scope of liability as herein set forth and are unrelated to the value of the customer’s property or property of others located in customer’s premises. ADT makes no guarantee or warranty, including any implied warranty of merchantability or fitness, that the system or services supplied, will avert or prevent occurrences or the consequences therefrom, which the system or service is designed to detect or avert; that if ADT should be found liable for loss, damage or injury due to a failure of service or equipment in any respect, its liability shall be limited to a sum equal to 100% of the annual service charge or $10,000.00, whichever is less, as the agreed upon damages and not as a penalty, as the exclusive remedy; and that the provisions of this paragraph shall apply if loss, damage or injury irrespective of cause or origin, results, directly or indirectly to persons or property from performance or non-performance of obligations imposed by this contract, or from negligence, active or otherwise, of ADT, its agents or employees.
The jeweller was robbed and pressed an alarm button while the robbers were on the premises, but, for or no apparent reason, an employee of the security firm failed to respond to the alarm for 10 full minutes and the robbers made a clean getaway. The trial judge refused to allow the defendant company to rely on the exclusion clause. The trial judge first argued that the failure to respond to the alarm was a fundamental breach of contract. Then, applying the test outlined by Wilson J. in Hunter, he concluded that it would have been unfair or unreasonable in the circumstances of this case to permit the defendant to rely on the limitation clause. In this context, the trial judge considered the fact that the plaintiff had not read the agreement and was unaware of the exclusion clause when signing the contract. Applying the test outlined by Chief Justice Dickson