Controlling Unfair Terms in Contracts - Week 5/6 Flashcards
What are the types of contract terms?
Express Terms – clearly agreed (orally or in writing)
Implied Terms – added automatically by law (e.g. Sale of Goods Act 1979)
Incorporated Terms – referenced or based on consistent prior dealings
How are terms incorporated into a contract?
By signature – usually binding unless term is unusually onerous
By notice – document must appear to be part of contract and terms brought to attention before contract is made
What laws control unfair terms in contracts?
Unfair Contract Terms Act 1977 (UCTA) – mainly for business-to-business contracts
Consumer Rights Act 2015 – for trader-to-consumer contracts
How does UCTA 1977 control exemption clauses?
Exemption for death/personal injury by negligence is void
Other liability – allowed only if fair and reasonable
Applies to employment, sale/hire of goods, services, premises access
What is the ‘Fair and Reasonable’ test under UCTA?
Party must prove clause was fair at the time of contract
Courts consider:
- Resources of the party
- Whether they had insurance
- Relative bargaining power
- Awareness of the clause
- Special customer requests
What contracts does the Consumer Rights Act 2015 apply to?
Contracts between traders and consumers (consumer contracts)
Consumer notices (contractual and non-contractual)
Encourages plain, intelligible language
How does the CRA 2015 define ‘Trader’ and ‘Consumer’?
Trader – person acting for business-related purposes
Consumer – individual acting outside trade, business or profession
What is the Fairness Test under CRA 2015?
A term is unfair if:
- It causes a significant imbalance in rights and obligations
- It is contrary to good faith
- It harms the consumer
What is the ‘grey list’ under CRA 2015?
Examples of likely unfair terms:
-High termination fees
- Loss of prepayments
- Business changes price or terms unilaterally
- Hindering consumer legal rights
What are transparency requirements under CRA 2015?
Written terms must be clear, legible, and in plain language
If unclear, interpretation most favourable to the consumer prevails
What does CRA 2015 say about liability for negligence?
Trader cannot exclude liability for death or personal injury due to negligence
Other losses – only limited if fair under the fairness test
