WK 9 - Statutory Control of Contract Terms

Question 1

What does Part 2 of the Consumer Rights Act 2015 replace?

Answer 1

Previous provision under Unfair Contract Terms Act 1977 and the Unfair Terms in Consumer Contracts Regulations of 1994 and 1999

Question 2

What does Part 2 of the Consumer Rights Act 2015 apply to?

Answer 2

Contract between trader and consumer - s61(1)

A ‘consumer contract’ - s61(3)

And to notices s61(4)

Question 3

Define a trader

Answer 3

Trader: ‘A person acting for purposes relating to that person’s trade, business, craft or profession, whether acting in the trader’s name or on the trader’s behalf.’

[s2(2) and s61(4)]

Question 4

Define ‘consumer’

Answer 4

‘an individual acting for purposes that are wholly or mainly outside that individual’s trade, business, craft or profession’

[s2(3)]

Question 5

Despite what parties feel, what must courts consider?

Answer 5

Fairness of a term of a consumer contract

[s71]

Question 6

Are unfair terms or notices binding on consumer?

Answer 6

No - s61(1) and (2)

Question 7

Three-part test of terms in business to consumer contracts

Answer 7

s62(5)

Contrary to requirement of good faith

Causes a significant imbalance in the parties’ rights/obligations

To the detriment of the consumer

Question 8

What is fair is determined by

Answer 8

s62(7) -

• Taking into account the nature of the subject matter of the contract, and
• Reference to the circumstances existing when term agreed (contract) or when rights/obligations arose (notice) and to the terms of the contract

Question 9

Consumer contract terms which may be regarded as
unfair – Schedule 2

Answer 9

• Terms which restrict the liability of the trader
• Terms which allow the trader to make unilateral decisions about the main subject of the contract or the price
• Terms where the trader’s rights following a breach are disproportionately better than consumer
• Terms restricting or adversely affecting the consumer’s right to litigate in the event of a breach

Question 10

Consumer contract terms which may not be
regarded as unfair – s64

Answer 10

So long as transparent and prominent:

• A term about the main subject matter of the contract
• A term about the price by comparison with goods, digital content, or services supplied under it

Office of Fair Trading v Abbey National plc [2009] UKSC 6

Question 11

What is a term is unclear or ambiguous?

Answer 11

Meaning most favourable to consumer will prevail s69(1)

Question 12

What happens if a term is deemed to be unfair?

Answer 12

• Not binding on customer s62(1) (contract) & s62(2) (notice)
• The rest of the contract continues (so far as practicable) to have an effect in every other respect [s67]

Question 13

What happens if an exclusion clause is unfair?

Answer 13

• “A trader cannot by a term of consumer contract or by a consumer notice exclude or restrict liability for death or personal injury resulting from negligence.”

S65

Question 14

Who does Unfair Contract Terms Act 1977 apply to?

Answer 14

“businesses” e.g., companies, firms, professionals,
government, local authorities

Question 15

Which type of businesses does Unfair Contract Terms Act 1977 apply to?

Answer 15

Applies only to certain types of business-to-business contract (and
notices) – s15(2)

e.g., sale, contracts of service, use of land

Question 16

How does UCTA effect exclusions of liability and restrictions on liability for breach of duty?

Answer 16

• Breach of any obligation… to take reasonable care or exercise reasonable skill in the performance of the contract
• Breach of any common law duty to take reasonable care or exercise reasonable skill
• Breach of the duty of reasonable care imposed by… the Occupier’s Liability (Scotland) Act 1960

Question 18

Standard form contracts have no effect if…

Answer 18

excludes or restricts liability for a contractual breach or if allows no performance or substantially different performance than that anticipated by the customer - s17

[might use standard form if previous dealings; standard sets of T&C’s]