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CONTRACT – Exemption clauses (lecture 12)
STATUTORY REGULATION

The Reasonableness Test

Unfair Contract Terms Act 1977
(UCTA)

S11(1) ‘a fair and reasonable one to have been
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’

Covers business liability: exemption or
limitation clauses re contractual and
tortious liability (s1(3)) and for PI and
death, non-contractual notices (s2(1))
...
NB s13 SGSA 1982
S2 Control over terms that exclude or
restrict liability for negligence
...
2)
...


Unfair Terms In Consumer Contract Regs
99 (UTCCR)
Main distinctions from UCTA:
Reg 3 Consumer – only natural or legal
person acting for purposes outside his trade,
business or profession – narrower than UCTA
77
...
Apply to all unfair terms in
contracts – wider than UCTA 77
...
Also, the
circumstances known to one party only are irrelevant
eg market difficulties involved in procuring product
...


S11(4) Limitation Clauses: Relevant factors in
determining reasonableness
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S11(4)(b) Whether party
relying could have insured – St Albans v International
Computers ltd (policy decision and international
companies have insurance so they should pay)

Reg 6 Unfairness assessed taking account –
subject matter; all circumstances surrounding
conclusion of contract; all other terms of
contract
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S11(3) – non-contractual notices
...


S3 Control over terms that exclude or
restrict liability for breach of contract
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Sch
...


S6 Control over terms that exclude or
restrict liability in contracts for the sale
and supply of goods
...

S13 Varieties of exemption clauses – a)
making liability subject to restrictive or
onerous conditions b) Excluding or
restricting any right or remedy c)
Excluding or restricting rules of evidence
or procedure – Stuart Gill v Horatio Myer

Reg 7 Plain, intelligible language

Sch2(1)(e) – requiring a disproportionately
high sum in compensation (penalty clause)

CASES: George Mitchell v Finney Lock Seeds/ The
software cases eg Watford Electronics v Sanderson –
reasonable ECs negotiated by experienced business
people/ The ‘soft drinks’ cases eg Britvic Soft Drinks
v Messer UK Ltd – unreasonable EC in standard form
contract concerning non-contemplated risk
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Can only exclude/restrict liability and
render substantially different/no performance IF terms
satisfies reasonableness test (S11 & sch
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Liability from breach of Sale and Supply of Goods
– S6
S6-where excluding liability for breach of terms
implied by SGA 79 & SGSA 82
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S6(2)(a)- as against CONSUMERS as ss13,14 and 15
SGA 79 cannot be excluded or restricted
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Requirement of the of
reasonableness (s11 & sch 2)
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NB UCTA ONLY APPLIES TO
EXEMPTION CLAUSES

 



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