Exemption clauses and unfair terms Flashcards
What is an exemption clause?
A contractual term that purports to limit or exclude a liability that would otherwise attach to one of the contracting parties.
What three points must be considered when determining whether a party can rely on an exemption clause?
-Incorporation
-Construction
-Statutory controls
What is the contra proferentem rule?
This means that if there is any doubt as the meaning and scope of an exemption clause, the ambiguity will be resolved against the party seeking to rely upon it.
Clear and unambiguous words must be used if they are to excuse one party from its liability.
Is a clause likely to be read contra proferentem in a commercial contract?
No, as the parties will have equal bargaining power-Victoria Street v House of Fraser (2011).
What is the purpose of the Unfair Contract Terms Act (UCTA) 1977?
Applies in the case of contracts between businesses. The purpose is to impose further limits on the extent to which liability for breach of contract/negligence can be avoided by means of contract terms and otherwise.
What does S2(1) UCTA 1977 provide in relation to exempting liability for death/personal injury resulting from negligence?
Section 2(1) UCTA provides any attempt to exclude or restrict liability for death or personal injury resulting from negligence will be void.
What does S2(2) UCTA 1977 provide in relation to exempting liability for other loss resulting from negligence?
Section 2(2) UCTA provides that any attempt to exclude or restrict liability will be valid if it satisfies the requirement of reasonableness.
What does S6(1) UCTA 1977 provide in relation to exempting liability for breach of statutory implied terms about quality of goods?
Section 6(1A) UCTA provides that liability for breach of S13-15 SGA 1979 can only be restricted if the term satisfies the requirement of reasonableness.
Does UCTA 1977 apply to a term limiting liability in a negotiated agreement?
No, it only applies to a term limiting liability in a party’s standard terms. Such a term will be valid if it satisfies the requirement of reasonableness.
What is the reasonableness test set out in S11 UCTA 1977?
In order to pass the UCTA reasonableness test, the term:
shall have been 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.
What are the guideline factors that are taken into account when applying the UCTA 1977 reasonableness test?
a) strength of bargaining positions of the parties
b) whether the customer received an inducement to agree to the term
c) whether the customer knew or ought reasonably to have known of the existence and extent of the term
d) where the term excludes or restricts any relevant liability if some condition was not complied with, whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable;
e) whether the goods were manufactured, processed or adapted to the special order of the customer.
What does Part II CRA 2015 do?
It regulates unfair terms in consumer contracts.
Are exemptions of liability in relation to death/personal injury resulting from negligence binding on the consumer under CRA 2015?
Section 65(1) CRA provides that a trader cannot exclude or restrict liability for death or personal injury resulting from negligence and is not binding on the consumer as a result.
Are exemptions of liability for breach of statutory implied terms about goods and digital content binding on the consumer under CRA 2015?
No, any such exemptions will not be binding on the consumer.
Are exemptions of liability for breach of statutory implied terms about services binding on the consumer under CRA 2015?
Any attempt to exempt liability under S49 CRA 2015 will not be binding to the extent that it would prevent the customer from recovering the price paid-liability cannot be limited to less than the price paid.
