Exclusion Clauses

Question 1

What 2 factors does ParkingEye v Beavis establish about determining whether a clause is a valid liquidated damages clause or a penalty clause?

Answer 1

1) Was there a legitimate interest in the charge?

2) Was the fee charged extravagant or unconscionable?

Question 2

What does Goodlife Foods Ltd v Hall Fire Protection Ltd (2018) establish about what the result will be of a finding that a contract term was unfair under UCTA 1977?

Answer 2

Where severance of this clause is possible, it will be severed and the contract will continue.

Effect will be to prevent the defendant party relying on the exclusion or limitation clause and remaining liable for any loss.

Question 3

What is set out under s.11 of the Unfair Contract Terms Act 1977?

Answer 3

The ‘reasonableness’ test: sets out when it will be reasonable in the B2B context for parties to exclude or limit their liability.

Question 4

What are the 2 factors under s.11(4) of the Unfair Contract Terms Act 1977 to be considered in assessing an exemption clause’s reasonableness?

Answer 4

1) Resources available to the party if liability was held to be allowed (i.e. bargaining power / size of company).

2) Availability of insurance.

Question 5

Exemption clause

Answer 5

Covers exclusion AND limitation clauses

Question 6

Difference between terms covered by the Consumer Rights Act 2015 and the Unfair Contract Terms Act 1977?

Answer 6

CRA 2015 - covers unfair terms AND exemption clauses.

UCTA 1977 - only covers exemption clauses (not unfair terms).

Question 7

What does George v Finney Lock Seeds show about the harshness of limitation as opposed to exemption clauses?

Answer 7

Limitation clauses can be just as harsh as exemption clauses in practice.

Question 8

What are the 5 factors considered under Schedule 2 of the Unfair Contract Terms Act 1977 when assessing an exemption clause’s reasonableness?

Answer 8

a) Strength of parties’ bargaining position

b) Did customer recieve inducement to agree to a term?

c) Did customer know based on custom / previous course of dealings that such a term may exist within the contract?

d) Did the customer comply with the condition?

e) Were goods manufactured to the special order of the customer?