CONTRACT LAW L4 - Unfair Terms & Exemption Clauses - UCTA 1977

Question 1

When must you consider the UCTA 1977 and CRA 2015? (3)

Answer 1

If the clause has been properly incorporated into the contract and, properly construed, excludes / limits liability being considered.

Question 2

What do you need to consider when considering whether a party can rely on an exemption clause? (6)

Answer 2

1. Incorporation - is the clause part of the contract.
2. Construction - does the clause cover the alleged breach and resulting loss?
3. Statutory controls - what is the effect of the clause on the UCTA 1977 and CRA 2015?

Question 3

What is the purpose of the UCTA 1977? (3)

Answer 3

‘An act to impose further limits on the extent to which… liability for breach of contract, or for negligence or other breach of duty, can be avoided by means of contract terms or otherwise.’

Question 4

What do the provisions of the UCTA 1977 not apply to? (1)

Answer 4

Consumer contracts, which are governed by the CRA 2015.

Question 5

What does section 1(3) stating that provisions apply only to ‘business liability’ mean? (2)

Answer 5

From things done or to be done by a person in the course of a business and from the occupation of premises used for business purposes of the occupier.

Question 6

What does the UCTA regulate? (1)

Answer 6

Only exemption clauses and not all ‘unfair terms’.

Question 7

What does negligence for the purpose of S1(1) UCTA include? (3)

Answer 7

Breach of any obligation, arising from the express or implied terms of a contract, to take reasonable care or exercise reasonable skill in the performance of the act or and in any common law duty to take reasonable care or exercise reasonable skill.

Question 8

What does S2(1) state in terms of death? (2)

Answer 8

A person cannot by reference to any contract terms or to a notice given to persons generally or to a particular persons exclude or restrict his liability for death or personal injury resulting from negligence.

Question 9

What does S2(2) provide in terms of other loss or damage? (2)

Answer 9

A person cannot exclude or restrict his liability for negligence except so far in the term or notice satisfies the requirement of reasonableness.

Question 10

What does S6(1)(A) provide in regards to breach of S13-15 of the SGA 1979? (2)

Answer 10

It cannot exclude or restrict it by reference to a contract term except in so far as the term satisfies the requirement of reasonableness.

Question 11

What does S3(2)(b)(i) and (ii) provide in regard to performance? (2)

Answer 11

A party cannot by reference to any contract term claim to be able to render a contractual performance substantially different from that which reasonable expected or claim ti be entitled in respect of whole or any part of the contractual obligation to render no performance at all.

Question 12

What does the case of ST ALBANS CITY COUNCIL V INTERNATIONAL COMPUTERS LTD 1995 demonstrate? (3)

Answer 12

The courts take a relatively common sense approach to deals on written standard terms of business.
The court considered that even where a party’s general terms have been the subject of negotiation, they were still dealing on standard terms for the purpose of the UCTA as the terms remained relatively untouched.

Question 13

What does the case of COMMERCIAL MANAGEMENT LTD V MITCHELL DESIGN & CONSTRUCT 2016 demonstrate? (2)

Answer 13

It shows that there has been recent support that if the exemption clauses are from one party’s standard terms, then even if other clauses are negotiated or come from the other party the UCTA will still apply.

Question 14

According to S11(1) what is required to pass the UCTA reasonableness test? (2)

Answer 14

The term shall be a fair and reasonable one to be included having regard to the circumstances which were or ought reasonably to have been known to or in the contemplation of the parties when the contract was made.

Question 15

At what point is the requirement of reasonableness judged? (1)

Answer 15

When the contract was made.

Question 16

What does S11(2) state in regard to the schedule 2 guidelines? (2)

Answer 16

They should be taken into account for the purposes of S6 and S7 of the UCTA and the courts have clarified that schedule 2 guidelines can be used more widely in STEWART GILL LTD V HORATIO MYER & CO LTD 1992.

Question 17

When should schedule 2 guidelines be taken into account? (1)

Answer 17

When applying the reasonableness test.

Question 18

What are the schedule 2 guidelines? (5)

Answer 18

1. The strength of the bargaining positions of the parties relative to each other.
2. Whether the customer received an inducement to agree to the term.
3. Whether the customer knew or ought to have known of the existence and extent of the term.
4. Where the terms excludes or restricts any relevant liability.
5. Whether the goods were manufactured, processed or adapted to the special order of the customer.