Statutory Controls

Question 1

statute law controls:

Answer 1

Unfair Contract Terms Act (UCTA)
Consumer Rights Act (CRA)

Question 2

what is UCTA?

Answer 2

This Act is the main protection against exclusion clauses in non-consumer contracts, it uses a test of ‘reasonableness’

Question 3

certain terms are invalidated and unenforceable by the UCTA Act:

Answer 3

excluding liability for death or personal injury by negligence
implied condition as to the title (ownership)

Question 4

UCTA Reasonableness Test

Answer 4

burden of proof
exclusion clauses in general
exclusion clauses for breaches of implied terms
limitation clauses

Question 5

burden of proof s.11

Answer 5

The party who inserts the clause (and wants to uphold it) must show it is reasonable in all circumstances (Warren v Truprint Ltd)

Question 6

Warren v Truprint Ltd

Answer 6

facts: an exclusion clause limiting liability to reprint costs was considered unreasonable.
held: court allowed the claimant to seek damages beyond this limit, highlighting the scrutiny of exclusion clauses for fairness.
principle: contract terms cant be unilaterally changed after formation, even if communicated through standard form terms sent later.

Question 7

exclusion clauses in general s.11

Answer 7

is the term reasonableness in light of what was known to the parties at the time? (Smith v Eric S Bush)

Question 8

Smith v Eric S Bush

Answer 8

facts: Surveyors negligently conducted a valuation, missing a defect, causing losses to the purchaser. Both the surveyor and mortgage application had exclusion clauses for report accuracy.
held: including the exclusion clause was unreasonable.
principle: exclusion clauses in contracts can limit liability, even for negligent conduct, if properly incorporated into the contract.

Question 9

exclusion clauses for breaches of implied terms s.11

Answer 9

courts consider different factors: see diagram on next slide (Watford Electronics Ltd v Sanderson CFL Ltd)

Question 10

Watford Electronics Ltd v Sanderson CFL Ltd

Answer 10

facts: C bought faulty software from defendant.
held: court found the liability clause, limiting damages to the product’s price, reasonable due to equal bargaining power and negotiability during contract formation.
principle: one party cant change contract terms without the other party’s agreement, even with notice.

Question 11

limitation clauses s.11

Answer 11

resources available for the defendant to meet their liability. was it open for C to cover themselves by insurance?

Question 12

George Mitchell Ltd v Finney Lock Seeds

Answer 12

facts: C purchase of £201.60 winter cabbage seed led to unfit plants, a £61,000 loss.
held: The contract’s liability limit to replacement/refund was deemed unreasonable due to seller negligence, potential affordable insurance, and past settlements exceeding the limit.

Question 13

Warren v Truprint Ltd explanation

Answer 13

the party who inserts the clause (and wants to uphold it) must show its reasonable in all circumstances.

Question 14

Smith v Eric S Bush explanation

Answer 14

Is the term reasonable in light of what was known to the parties at the time?

Question 15

Watford Electronics Ltd v Sanderson CFL Ltd explanation

Answer 15

courts: consider different factors eg.
inducements
knowledge
likelihood of compliance with term excluded
special order goods
relative bargaining strength

Question 16

George Mitchell Ltd v Finney Lock Seeds explanation

Answer 16

resources available for the defendant to meet their liability. was it open for D to cover themselves by insurance?

Question 17

section11(2) test aspects

Answer 17

inducements
knowledge
likelihood of compliance with term excluded
special order goods
relative bargaining strength