Exclusion And Limitation Clauses - Statutory Controls Flashcards
What are the acts used in statutory controls?
Unfair contract terms act 1977
Consumer Rights Act 2015
What does the UCTA apply to?
Business to business contracts
What does the CRA 2015 apply to?
Consumer contracts between consumer (individual) and trader (business)
What does the UCTA 1977 state that a business cannot exclude liability for? Include the sections of the act
S.2(1) Death or personal injury caused by their negligence
S.2(2) Other forms of loss or damage like damage to property due to negligence unless….
S.6(1) Implied term that the seller has the right to sell (Sale of Goods Act 1979 and s7 supply of goods and services act 1982)
What CAN businesses exclude liability for?
S.2(2) other forms of loss or damage like property damage due negligence if it is reasonable to do so
-can exclude other statutory implied terms, only valid if reasonable
What else must be reasonable?
S.3 UCTA - where one party has to agree to the other party’s standard terms and conditions (not negotiated) then all terms must be ‘reasonable’
Where can guidelines on what is ‘reasonable’ be found? But who decides ultimately?
Section 11 and Schedule 2 of UCTA 1977
-Judge must decide by looking at all the circumstances and the guidelines
Who has the burden of proving that terms are ‘reasonable’ when using exclusion clauses? Case example
The party who is trying to exclude liability
-Warren v Trueprint
Warren v Trueprint
Principle of the case and what section this is
-Photographer lost photos of couples wedding anniversary
-Clause in the contract that said they limit liability to compensation of price of a new film
-Not reasonable as doesn’t compensate for the lost photos
-s11(5) of the UCTA requires the party who inserts the clause into the contract and who seeks to rely on it to show that it is reasonable in the circumstances
What is the test for the guidelines?
-The knowledge test
-Was the term ‘reasonable’ in light of what the parties knew at the time
What factors/guidelines need to be looked at and when are these looked at? (6)
-Looked at when a business tries to exclude implied terms from SGA and SGSA (only in business not consumer)
-Court must see whether it is reasonable by looking at factors like:
-relative bargaining strength ( if stronger party says not liable for something then not reasonable but if 2 companies same size then may be)
-Knowledge
-likelihood of compliance with term excluded
-special order goods
What is the case example for UCTA test
-Watford Electronics v Sanderson
- C bought software from D. System failed to perform and in D’s standard terms was clause limiting liability to price of goods supplied
-Court said reasonable term because parties of equal bargaining power
-limitation clause subject to negotiation when contract made
What is the section of the UCTA act for limitation clauses?
-S.11(4)
What do limitation clauses do and what does the act say about them?
-Limit the extent of D’s liability eg max compensation if contract breached
-Act says only reasonable if D reasonably would not have sufficient resources to pay full amount and it would not have been possible for d to arrange insurance to cover the cost of claim
What is the case example for limitation clauses for UCTA?
-George Mitchell v Finney Lock Seeds
-C ordered winter cabbage seeds from D at cost of £201.60. Seed not match description and produced unfit plants for resale. Entire crop lost at cost of 61,000.
-Contract limited liability to replacement of the goods or refund
-Not reasonable as breach arose from sellers negligence and seller could have insured at small price
