Exclusion Clauses and UCTA (L15) Flashcards
What is an exclusion clause?
Generally speaking, any clause which attempts to exclude or limit liability for breach of contract or for a breach of a duty owed in the law of delict/tort.
We have seen them before in:
- Hood v Anchor Line.
- Taylor v Glasgow Corporation.
- Thornton v Shoe Lane Parking.
What are the 3 types of exclusion clause?
Exclusion clause.
Limitation clause.
Indemnity clause.
What (specifically) is an exclusion clause?
Obligation otherwise imposed is excluded.
What is a limitation clause?
Admit liability, but limit extent (e.g. require a certain amount - liquidate damages clause).
Usually a financial limit.
What is an indemnity clause?
If one party incurs loss other will indemnify them for loss i.e. the wrongdoer gets someone else to pay.
What are the statutory controls placed on contracts to ensure their fairness?
UCTA 1977.
“Without adequate legal controls, there is a risk that the terms of contracts will be unfair to one of the parties.”
Does UCTA apply to this particular contract?
- s15 extensive list of contracts.
- s15(3) note exclusions.
Does UCTA apply to these particular contracting parties?
- If CONSUMERS! USE CONSUMER RIGHTS ACT 2015.
What are the control mechanisms set out in UCTA?
(a) Declaring the clause VOID (as if it never existed).
OR
(b) Subjecting the clause to a fair and reasonable test.
What are the provisions set out in UCTA?
s16 – attempt by a business to exclude liability resulting from breach of duty (as defined in s25 (1)).
s16(1)(a) exclusion of liability for death or personal injury are ALWAYS VOID.
s16(1)(b) exclusion of liability for damage/loss caused by any other breach of duty are only effective if they are FAIR AND REASONABLE.
What is the fair and reasonable test for consumers set out in UCTA?
s24 meaning of “fair and reasonable”
(a) s24(1) circumstances at time of formation of contract.
(b) s24(4) onus of proof. Not s24(3) or Schedule 2.
(c) Case law.
What is the fair and reasonable test for exclusion clauses in a strict sense (for consumers)?
Smith v Eric S Bush [1990] 1 AC 831.
Non-exhaustive list of factors:
- Equality of bargaining power?
- Availability of goods?
- Difficulty of task to be performed?
- Practical consequences of not allowing clause?
- Insurance implications?
What is the law for contract terms in business to business transactions?
What is a business?
- s25 wide definition.
- A business can be acting in some contexts as a consumer (see s3).
Exclusion clauses in business-to-business contracts which are subject to a “fair and reasonable” test.
s17(2) extends protection to “customers” contracting on standard terms of a business (standard form contract).
What is the fair and reasonable test for B to B transactions?
What is fair and reasonable? —> Smith v Eric S Bush 1990 1 AC 831.
ss20-21 —> Breach of implied terms in contracts for sale or supply of goods (as section 3 but in business context).
What is fair and reasonable? Sch2 applicable by virtue of s24(2).
- George Mitchell (Chesterhall) Ltd v Finney Lock Seeds Ltd [1983] 2 AC 803 as elaborated in more recent cases in England.
There is limited Scottish authority on this point. However, there is some:
Denholm Fishselling Ltd v Anderson 1991 SLT (Sh Ct) 24.
- All fish merchants had this term in their contracts - but still fair and reasonable.
