Contract - terms: exclusion and limitation clauses - The Unfair Contract Terms Act 1977

Question 1

What does the Unfair Contract Terms Act 1977 do?

Answer 1

Provides protection against exclusion clauses in non-consumer contracts (B2B)
Test of reasonableness is applied to exclusion clauses

Question 2

What exclusion clauses can’t be enforced as a result of the Act?

Answer 2

S.2(1)
S.2(2)
S.6(1)

Question 3

What is S.2(1)?

Answer 3

Can’t exclude liability for death or PI caused by negligence

Question 4

What is S.2(2)?

Answer 4

Can’t exclude/restrict liability for negligence beyong what is reasonable

Question 5

What is S.6(1)?

Answer 5

Implied condition as to title (Sale of goods act 1979 and Supply of Goods and Services 1982) can’t be excluded
Clause can’t be imserted into contract which means elements of acts don’t apply

Question 6

What is some AO3 for the Unfair Contract Terms Act 1977?

Answer 6

S.2(2) is vague, judges have to interpret law in line with what they think Parliament would have intended
Conflicts with ROL, judges decided outcome with vague guidance
However S.6(1) ensures businesses can’t be misled into agreements

Question 7

What does section 3 outline?

Answer 7

The reasonableness test

Question 8

What does S.11 outline?

Answer 8

The guidelines to confirm what is reasonable

Question 9

What does S.11(5) state?

Answer 9

Party who inserts clause into contract, who wishes to rely upon it, must show it is reasonable in all circumstances

Question 10

What happened in Warren v Trueprint?

Answer 10

Clause was unreasonable and Trueprint had to pay for wedding photos which they lost

Question 11

What does S.11(1) state?

Answer 11

Insertion of terms in contract must be reasonable in light of what the parties were aware of at the time

Question 12

What happened in Smith v Eric S. Bush?

Answer 12

Clause not reasonable when surveyors put clause which excluded their liability for inaccuracy of valuation reports

Question 13

What does S.11(2) state?

Answer 13

Covers exclusion clauses involving breaches of implied conditions under Sale of Goods Act 1979 and Supply of Goods and Services Act 1982.
B2B agreements.
Set out in Unfair Contract Terms Act 1977

Question 14

What happened in Watford Electronics v Sanderson?

Answer 14

Clause in term which limited liability to price of good supplied
Reasonable term as parties had equal bargaining power

Question 15

What is some AO3 for S.11(1)/S.11(2)?

Answer 15

Reasonable, subjective, inconsistent, laweyrs
Too many criteria for judge to consider, encourages judicial creativity
In favour of small businesses, judges consider bargaining strength and decide if exclusion caluse is incorporated

Question 16

What does S.11(4) state?

Answer 16

D should realise that is what they have provided is not to standard, should be liable
If D could have/should have inserted himself for whatever has happened, they fulfill criteria

Question 17

What happened in George Mitchell v Finney Lock Seeds?

Answer 17

C ordered seeds from D, seeds didn’t match description, plants not fit for sale, lost crops. Contract limited liability for replacement of goods
Clause not reasonable