Contents & Exemption Clauses

Question 1

What three ways may terms be incorporated into a contract?

Answer 1

1. Signature
2. Reasonable notice before or at time of the contract
3. Previous consistent course of dealing

Question 2

What are “innominate” or “intermediate” terms, from Hong Kong Fir Shipping v Kawasaki?

Answer 2

Parties can only terminate / affirm if a breach of the term was “really serious and effectively deprived the innocent party of substantially the whole benefit they expected to receive under the contract”

Question 3

What are the three ways that terms are implied at common law?

Answer 3

1. Implied by custom - e.g. what are regarded as the well-known and legally binding customs of a particular trade
2. Implied in fact - contract would be unworkable without them
3. Implied by law - law regards it as necessary of a particular type of contract

Question 4

What Acts governs terms implied by statute into business-to-business contracts for the sale and supply or goods and/ or services?

Answer 4

Sale of Goods Act (SOGA) 1979
Supply of Goods and Services Act (SGSA) 1982

Question 5

What are the key provisions from the SOGA?

Answer 5

s 12(1) - right of seller to sell the goods

s 13(1) - goods with correspond with description

s 14(2) - where seller sells goods in course of a business there’s implied term of satisfactory quality

14(2A) - goods of satisfactory quality if meet standard reasonable person would regard as satisfactory

s 14(3) - fit for purpose

Question 6

What are the key provisions of s 14 SOGA?

Answer 6

(2) Where the seller sells goods in the course of a business, there is an implied term that the goods supplied under the contract are of satisfactory quality

(2A) For the purposes of this Act, goods are of satisfactory quality if they meet the standard that a reasonable person would regard as satisfactory, taking account of any description of the goods, the price (if relevant) and all the other relevant circumstances

(2B) For the purposes of this Act, the quality of goods includes their state and condition and the following (among others) are in appropriate cases aspects of the quality of goods—
(a) fitness for all the purposes for which goods of the kind in question are commonly supplied,
(b) appearance and finish,
(c) freedom from minor defects,
(d) safety, and
(e) durability

Question 7

What types of liability are sections 12, 13 and 14 and what does this mean?

Answer 7

Strict liability therefore buyer can reject goods and get a refund, and claim for damages - regardless of if there is any fault on seller’s side

All are also conditions - if breached the innocent party can reject the goods, get refund and claim damages

Question 8

In what events can the buyer NOT reject the goods and get a refund and claim for damages, under ss 12, 13 or 14?

Answer 8

Once the buyer has accepted to goods

Also in relation to ss 13 and 14, if the breach is so slight that it would be unreasonable to reject the goods

Question 9

What are the key provisions from Supply of Goods and Services Act 1982? Also, are they condition (C) or innominate term (IT)

Answer 9

s 2(1) - transferor has right to sell (C)

s 3 - where supply of goods by description, implied term that goods correspond with description (C)

s 4(2) - where supplied in course of a business, goods of satisfactory quality (C)

s 4(5) - where supplied in course of a business, goods must be fit for purpose if buyer has made purpose known to seller and reasonably relied on their skill/ knowledge (C)

s 13 - in course of a business, service carried out with reasonable care and skill (IT)

s 14 - in course of a business, service will be done within a reasonable time (IT)

s 15 - reasonable sum will be charged for service if not fixed (IT)

Question 10

What Act governs business-to-consumer contracts for the sale of goods and supply of goods and services?

Answer 10

Consumer Rights Act (CRA) 2015

Question 11

What are the key provisions of the CRA?

Answer 11

s 9 - where goods sold/ supplied in course of a business, will be of satisfactory quality

s 10 - where goods sold/ supplied in course of a business, will befit for purpose if made known to seller and reasonably relied on seller’s skill/ knowledge

s 11 - where sold by description, correspond with description

s 17 - seller has right to sell

s 49 - where work or service done in the course of a business, will be carried out with reasonable care and skill

s 51 - reasonable sum will be charged if not fixed

s 52 - where work or service done in course of a business, will be done within reasonable time

Question 12

In the event of a breach of ss 9 - 11 CRA, what rights does the consumer have under s 19?

Answer 12

Short-term right to reject and get full refund (30 days)

Right to repair or replacement

Right to price reduction or final right to reject and get partial refund to reflect consumer’s use of the goods

Pecking-order of remedies - right to common law damages unaffected

Question 13

Can s 9 - 11 CRA be excluded or restricted?

Answer 13

No

Question 14

What kind of liability are ss 9 - 10?

Answer 14

Strict liability - i.e. manufacturing fault is irrelevant

Question 15

What are the two tests in identifying the validity of a contractual clause?

Answer 15

Test 1 - incorporation

Test 2 - construction

Question 16

What is the “contra proferentem” rule and when would it be used?

Answer 16

If there is any ambiguity or uncertainty about the meaning of a clause, the courts will interpret the clause AGAINST the party which is seeking to rely on it

Question 17

In the event of a negligent breach, which UCTA section applies and what is the effect?

Answer 17

S 2 UCTA applies

If death / PI = exemption clause is void

If loss / damage = exemption clause is valid if reasonable

Question 18

If there is a breach of terms implied by ss 13 and 14 SOGA or ss 3 and 4 SOGASA, which UCTA section applies and what is the effect?

Answer 18

S 6 or S 7 UCTA

Exemption clause valid if reasonable

Question 19

If there is a breach of an express term, which section of UCTA applies and what is the effect?

Answer 19

S 3 UCTA (only if party is dealing on the other’s written standard terms of business)

Exemption clause valid if reasonably

Question 20

In what circumstances would a sales contract not be binding under the CRA?

Answer 20

If it excluded or restricted a right or remedy in respect of breach of ss 9 - 11

Allows a trader to put a person at a disadvantage as a result of pursuing such a right or remedy

Exclude or restrict rules of evidence or procedure