UCTA

Question 1

What is the Unfair Contract Terms Act?

Answer 1

There have been instances where even if the exclusion clause has been incorporated into the contract, it can be rendered void by law. One such important law is the Unfair Contract Terms Act, also known as UCTA

The Act operates on the basis of reasonableness. If an exclusion clause is unreasonable. it would be deemed void even if it had been incorporated into the contract.

Question 2

What are the 4 determinants of reasonableness?

Answer 2

1. The bargaining positions of the parties. If the parties are on equal footing then the exclusion clause would be considered reasonable, all other things being equal.
2. Whether the customer had received an inducement to agree to the term.
3. If the customer had knowledge of the exclusion clause: if there was knowledge, then it is likely to be reasonable.
4. Whether it is practical to comply with the exclusion clause.

Question 3

What is the scope of the UCTA?

Answer 3

The operation of the provisions of the UCTA are mainly visible in business liability cases or consumer transactions.

Business liability refers to liability arising from things done in the course of business or professional activities. A business party is a party who makes the contract in the course of business.

Consumer transactions refers to consumer contracts. A consumer is someone who does not make a contract in the course of business. However, he makes a contract with a party who is acting in the course of the business for goods of a type ordinarily supplied for private use or consumption.

Question 4

What is the scope of Sections 2(1) and 2(2) UCTA?

Answer 4

For section 2(1) UCTA, the exclusion clause that restricts or limits liability for death or personal injury arising from negligence is void. Therefore, if death or personal injuru is caused by negligence of the business party relying on the exclusion clause, liability cannot be excluded. This means that the exclusion clause is void and the business party will be held liable.

For section 2(2) UCTA, the exclusion clause that restricts or limits liability for other types of loss or damage is valid if the term or notice of the exclusion clause is reasonable.

Question 5

What are some instances where exclusion clauses are deemed invalid by UCTA?

Answer 5

The following are instances where a business party cannot exclude liability:

(a) For death or personal injury arising from the business party’s negligence,
(b) For breach of an implied term as to title under section 12 of SOGA in contracts for sale of goods or hire purchase between two business parties or a business party and a consumer.
(c) For breach of an implied term as to description under section 13 , satisfactory quality under section 14(2), and fitness for purpose under section 14(3) in contracts for the sale of goods or hire purchase with a consumer.

Question 6

What are some instances where exclusion clauses are deemed valid?

Answer 6

The following are instances where a business party may exclude liability based on fairness and reasonableness:

(a) If there is property loss or damage arising from the business party’s negligence.
(b) If there is a breach of an implied term as to description under section 13 SOGA, satisfactory quality under section 14(2) and fitness for purpose under section 14(3) in a business to business contract.