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Excerpt from Article:
INCORPORATION OF UNUSUAL OR UNREASONABLE TERMS INTO CONTRACTS: THE RED HAND RULE AND SIGNED DOCUMENTS
STEVE KAPNOULLAS* AND BRUCE CLARKE**
[This article analyses case law relating to the red hand rule. In particular, there is an examination of the decision of the High Court in Toll V Alphapharm Pty Ltd. The judgment of the court signals a clear answer as to whether the red hand rule applies to signed documents. In this context, the authors also consider whether section 52 of the Trade Practices Act, and statutory provisions relating to unconscionability, are available to protect consumers against unusual or unreasonable clauses incorporated into signed contracts. Two recent cases involving share trader David Tweed are also analysed. ]
INTRODUCTION
It is trite law that a party attempting to exclude or limit legal liability, by incorporating an exemption clause into an unsigned contract, must take reasonably sufficient steps (at or before the time of contracting) to give notice ofthe clause to the other party.' The more unreasonable or unusual the clause, the greater the insistence by some judges that the clause be drawn to the attention of the other party in an explicit way, such as being printed in red ink with a red hand pointing to it. The genesis of the so-called red hand rule is to be found in Spurling v Bradshaw Ltd where Lord Denning said:
The more unreasonable a clause is, the greater the notice which must be given of it. Some clauses would need to be printed in red ink with a red hand pointing to it before the notice could be held to be sufficient.
* Senior Lecturer, Faculty of Business and Enterprise, Swinburne University of Technology. ** Senior Lecturer, Faculty of Business and Enterprise (Hawthorn) & Faculty of Higher Education (Lilydale), Swinburne University of Technology. ' See Parker v South Eastern Railway Co {ISll) 2 CPD 416. ^[1956] 1 WLR461. ^[1956] 1WLR461,466.
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