7. Exemption Clauses

Question 1

What contracts do the Sale of Goods Act 1979 terms apply to?

Answer 1

GOODS CONTRACTS (business reasons) between:
1. business-to-business
2. consumer-to-consumer
3. consumer-to-business

Question 2

s 13 SGA 1979

Answer 2

There is an implied condition that the goods will correspond with that description and is implied whether seller is business or private individual.

Question 3

s 14 SGA 1979

Answer 3

(1) goods will be of satisfactory quality (2) and the goods will be fit for purpose (3) the buyer’s purpose being made known to seller expressly or by implication.

Question 4

If a buyer wants the benefit of SGA s 14(3) goods will be fit for a particular purpose - what must have occurred

Answer 4

The buyer must have made it clear to the seller if they intended the goods for a purpose OTHER than their normal purpose
- if you only want them for their normal purpose, no need to tell them

Question 5

Breaches of s 13 and s 14 SGA 1979: What are potential remedies

Answer 5

1. Right to terminate the contract and reject the goods

Question 6

under SGA 1979, when does the buyer lose the right to terminate the contract / reject the goods?

Answer 6

1. They have accepted them (retains them for a reasonable time)
2. breach is so slight it is unreasonable for them to be rejected

Question 7

Which types of contracts are governed by the Supply of Goods and Services Act 1982?

Answer 7

contracts for services (any parties), and contracts for work and materials that are not made between a trader and consumer.

Question 8

Key CONDITIONS in the SGSA 1982

Answer 8

3: Where there is a supply of goods by description, the goods must correspond with their description
4: goods must be of satisfactory quality
4(5): if buyer makes it known to seller (expressly or impliedly) the purpose for their goods and reasonably relies on sellers skill / knowledge, goods must be fit for this purpose

Question 9

s 13 SGSA: Where work or a service is done in the course of a business, there is an implied term that it will be carried out with reasonable care and skill - WHICH contracts does this apply to?

Answer 9

1. Work and materials
2. Services

Question 10

Which types of contracts are governed by the Consumer Rights Act 2015?

Answer 10

Sales contracts from traders to CONSUMERS
(1) Traders: a person acting for purposes relating to that person’s trade, business, craft or profession, whether acting personally or through another person acting in the trader’s name or on the trader’s behalf
(2) Consumers: an individual acting for the purposes that are wholly or mainly outside that individual’s trade, business, craft or profession

Question 11

Breach of CRA 2015 implied term of reasonable care and skill or reasonable time for completion - what can the consumer demand (by way of statute)

Answer 11

1. Repeat performance
2. Price Reduction

Question 12

Key rights in CRA 2015

Answer 12

s 49: service / work carried out with reasonable care / skill
s 51: where no price has been fixed, reasonable price will be paid
s 52: where no time for performance has been fixed, service must be performed within a reasonable time

Question 13

Contra Proferentem Rule

Answer 13

if a party relies on a clause which is ambiguous or unclear, court will interpret against defaulting party
- therefore unclear clauses will be constructed not to cover damage the contract is attempting to restrict liability for

Question 14

UCTA 1977: Reasonableness test. What if part 1 of an exemption clause is not reasonable, but part 2 of the clause is - is the whole clause unreasonable?

Answer 14

No, specific parts of clause which are reasonable are held as distinct

Question 15

UCTA 1977: Key considerations for the court when assessing the reasonableness of an exemption clause

Answer 15

1. relative bargaining positions of the parties
2. any inducement to agree to exemption clause (if consumer given options: reasonable)
3. opportunities to enter into a different contract not with the clause (if consumer could have gone elsewhere but didn’t: reasonable)
4. Did customer know (or reasonably ought to have known) about the clause / its extent?
5. Where the exemption clause will apply if a condition is not complied with, was it reasonable at the time of the contract to expect that compliance with the condition would be practicable?
6. Were the goods manufactured, processed or adapted to the special order of the customer?

Question 16

Further guidelines for reasonableness not in UCTA 1977 but in Smith v Eric Bush

Answer 16

• which party was better placed to insure against the particular risk?
• did defendant have resources in place to meet the liability if it arose
• how difficult the task was

Question 17

Service Contracts: CRA 2015, what can a trader NOT restrict

Answer 17

1. liability for breach of s 49, s 51 or 52
2. the right to a remedy for breaches of ss 49-52
3. make a right or remedy subject to a restrictive or onerous condition
4. put a person at a disadvantage as a result of pursuing such a right or remedy or exclude or restrict rules of evidence or procedure

Question 18

CRA 2015: Sales Contracts: when is a term NOT binding on a consumer

Answer 18

1. If it attempts to exclude or restrict liability for s 9, (satisfactory quality) ,s 10 (fit for purpose) or s 11 (goods as described)
2. if it excludes or restricts a right or remedy in respect of these terms
3. makes a right or remedy subject to onerous condition
4. allows a trader to put a person at a disadvantage for pursuing a right or remedy here or
5. exclude or restrict rules of evidence of procedure

Question 19

if goods breach s 9-11 of the CRA 2015, consumer has the right:

Answer 19

1. short term right to reject and get a full refund
2. right to repair and replacement
3. right to a price reduction or final right to reject and get a partial refund to reflect consumer’s use of the goods