Exemption clauses and unfair terms MCQs Flashcards
A hairdressing salon (‘the salon’) purchases 10 hairdryers from a supplier. Before purchasing the hairdryers, the salon owner is asked to sign a fifteen-page document. Had the salon owner read the document, she would have seen the following clause at the top of the first page: ‘The supplier accepts no liability for any loss to property or injury to persons.’ The salon owner signs the document without reading it. On the first day of use, one of the hairdryers catches fire causing damage to the property of the salon. Fortunately, no one was injured.
Which one of the following statements best explains the legal position?
The supplier has breached an implied term under the Sale of Goods Act 1979 as the hairdryer was not of satisfactory quality. Although, the exemption clause was incorporated by signature, the Unfair Contract Terms Act 1977 states that it would only be possible to limit liability for the property damage in so far as the exemption clause satisfies the requirement of reasonableness.
The supplier has breached an implied term of the Consumer Rights Act 2015 as the hairdryer was not of satisfactory quality. The exemption clause has not been incorporated by signature as it was an onerous clause.
The supplier has breached an implied term under the Consumer Rights Act 2015 as the hairdryer was not of satisfactory quality. Although, the exemption clause was incorporated by signature, the Consumer Rights Act 2015 states that this term will not bind the salon.
The supplier has breached an implied term of the Sale of Goods Act 1979 as the hairdryer was not of satisfactory quality. The exemption clause has not been incorporated by signature as it was an onerous clause.
The supplier has breached an implied term of the Sale of Goods Act 1979 as the hairdryer was not of satisfactory quality. The exemption clause was incorporated by signature. The exemption clause will be effective as the Unfair Contract Terms Act 1977 only prevents exclusion of liability for death or personal injury.
The supplier has breached an implied term under the Sale of Goods Act 1979 as the hairdryer was not of satisfactory quality. Although, the exemption clause was incorporated by signature, the Unfair Contract Terms Act 1977 states that it would only be possible to limit liability for the property damage in so far as the exemption clause satisfies the requirement of reasonableness.
Correct. This answer sets out the correct breach under the Sale of Goods Act 1979 and recognises that the clause has been effectively incorporated but would be subjected to the requirement of reasonableness under the Unfair Contract Terms Act 1977. Although the other answer options sound plausible they are all incorrect. This contract does not fall under the Consumer Rights Act 2015. The clause has been validly incorporated through signature. As there is no personal injury loss s2(1) Unfair Contract Terms Act 1977 is not engaged. The fact that this clause could relate to personal injury caused by negligence does not invalidate the clause vis a vis other heads of damage.
A customer orders a mountain bike from a bike shop. The bike is ‘made to order’ – the customer chooses various parts and the bike is assembled in accordance with that choice and later delivered. The customer agrees to pay £1,200 on delivery. The customer discovers that the combination of parts he has chosen is actually readily available as a pre-assembled bike with numerous retailers for only £800. The customer no longer wants to pay the sum of £1,200 for the bike. Which of the following correctly summarises the situation as to whether the bike shop can enforce the payment obligation?
The court would determine whether the clause satisfies the test of reasonableness in order to determine whether it is enforceable.
The clause is enforceable only to the extent that the customer can be required to pay £800.
This clause is enforceable.
The court would determine whether the clause causes a significant imbalance in the parties’ rights and obligations to the detriment of the customer in order to determine whether it is enforceable.
The clause is unenforceable.
This clause is enforceable.
Correct. This is a consumer contract. The Consumer Rights Act 2015 includes a broad provision that makes terms generally not binding on the consumer if they are unfair. However, the court cannot assess terms specifying the main subject matter of the contract or assess the fairness of the price of goods. The payment obligation cannot be interfered with. If the court was able to assess this term for fairness, the test would be whether it causes a significant imbalance in the parties’ rights and obligations under the contract to the detriment of the consumer.
A student joins a kayaking course with an adventure company. Her instructor on the course negligently takes her into rapids far too dangerous for someone of her ability and experience. She capsizes and collides with several rocks, causing facial injuries. The contract she signed when she registered for the course included a clause (the ‘Clause’) which stated that the adventure company would not be liable for any facial injuries or disfigurements caused during the kayaking and would only be liable for broken limbs and fingers. Which one of the following is correct?
The Clause will not be effective to exclude liability for the student’s injuries
The Clause will be effective to exclude liability for the student’s injuries if it passes the test of fairness under the Consumer Rights Act 2015.
The Clause will be effective to exclude liability for the student’s injuries.
The Clause will be effective to exclude liability for the student’s injuries if it passes the test of reasonableness under the Unfair Contract Terms Act 1977.
The Clause will be effective to exclude liability the student’s injuries depending on the severity of the personal injuries.
The Clause will not be effective to exclude liability for the student’s injuries
A homeowner engages a professional decorator to decorate her house. She signs a written contract provided by the decorator which includes terms that: [clause A] the decorator’s liability for any injury caused by a failure to perform the service with reasonable care and skill will be limited to £5,000 [clause B] Nothing in clause restricts liability for death / personal injury resulting from negligence.
The decorator carries out the work carelessly, causing damage to the homeowner’s house in excess of £10,000.
Which of the following best summarises the legal situation in relation to the clauses referred to above?
The clause will be effective because it is a limitation rather than exclusion of liability.
The extent to which the clause is effective is likely to depend on the price paid by the homeowner.
The clause will be effective only so far as it satisfies the requirements of reasonableness.
The clause will be ineffective because the decorator is not permitted to exclude or restrict liability for death or personal injury resulting from negligence.
The clause will be ineffective because it has not been incorporated.
The extent to which the clause is effective is likely to depend on the price paid by the homeowner.
Correct. The clause has been incorporated – it is contained within a signed contract. This is a consumer contract for services, and this situation is governed by the Consumer Rights Act 2015. The obligation which the decorator seeks to exclude is the obligation under s 49 of the Act to provide the service with reasonable care and skill. Any attempt to entirely excludethis term will not be binding on the consumer. Any attempt to restrict / limit liability under section 49 will not be binding to the extent that it would prevent the consumer from recovering the price paid – so effectively, liability cannot be limited to less than the price paid, but a restriction / limitation that does not have this effect is not necessarily problematic (although it could be if it falls under the broader regulation of ‘unfair terms’). For this reason, the price paid is important.
A carpenter contracts with a company to carry out plumbing services. At the time of contracting an agent of the company signs a form, without reading it, containing the following clause, ‘Our total liability to you, including but not limited to our liability in negligence, shall not exceed £500’. The carpenter carries out the services with a lack of reasonable care and skill causing damage to company property. Which one of the following statements best explains the legal position?
The carpenter has breached an implied term of the Consumer Rights Act 2015 by failing to carry out the service with reasonable care and skill. The exemption clause limits liability for negligence at common law, however the company will not be taken to have voluntarily accepted any risk merely because he agreed to or knew about the exemption clause.
The carpenter has breached an implied term of the Consumer Rights Act 2015 by failing to carry out the service with reasonable care and skill. The carpenter cannot rely on the clause because it has not been read by the agent of the company.
The carpenter has breached an implied term of the Supply of Goods and Services Act 1982 by failing to carry out the service with reasonable care and skill. The exemption would be void under the Unfair Contract Terms Act 1977 as it attempts to limit liability caused by negligence.
The carpenter has breached an implied term of the Supply of Goods and Services Act 1982 by failing to carry out the service with reasonable care and skill. The exemption will not be construed to cover the carpenter’s breach.
The carpenter has breached an implied term of the Supply of Goods and Services Act 1982 by failing to carry out the service with reasonable care and skill. The exemption clause limits liability for negligence at common law, however the clause will only be effective in accordance with the Unfair Contract Terms Act 1977 if it satisfies the requirements of reasonableness.
The carpenter has breached an implied term of the Supply of Goods and Services Act 1982 by failing to carry out the service with reasonable care and skill. The exemption clause limits liability for negligence at common law, however the clause will only be effective in accordance with the Unfair Contract Terms Act 1977 if it satisfies the requirements of reasonableness.
Correct. This answer sets out the correct breach under s 13 SGSA and recognises that the clause is effective at common law (passing incorporation and construction) but would be subjected to the requirement of reasonableness under the Unfair Contract Terms Act 1977.
