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Unfair Contract Terms Act 1977


UCTA Purpose?

Limits imposition of terms which seek to avoid liability for breach of contract or negligence. ONLY regulates exemption clauses.


UCTA Provisions ensure (2):

1) certain types of exemption clause have no effect
2) other exemption clauses effective only so far as they satisfy reasonableness requirement


What type of liability do the main UCTA provisions apply? s 1(3)

1 (3)Business liability - liability for breach of obligations or duties there arising.


How does UCTA define business liability?

S 1 3
a) from things done or to be done by a person in the course of a business (his own or another's)
b) from occupation of premises used for business purposes of the occupier.


How does UCTA define Negligence? (3)

s 1(1) "negligence" means the breach
a) of any obligation, arising from express or implied terms of a contract, to take reasonable care or exercise reasonable skill in the performance of the contract;
b) of any CL duty to take reasonable care (but no stricter)
c)DoC imposed by Occupiers Liability Act 1957


Can you exclude or restrict liability for PI or death arising from negligence?

S 2 (1) - NO


Can you exclude or restrict liability for other loss arising from negligence?

s 2 (2) only so far as reasonable.


What is the "Reasonableness Test" (s 11, s1)

The term shall have been a fair and reasonable one to be include, having regard to the circumstances.


When is the requirement of reasonableness judged? (s11, 1)

Known or ought to have been known when contract made.


Burden of proving reasonableness? (s11,5)

Those claiming a contract term satisfies the requirement must prove it.


Where do you look to assess reasonableness in the UCTA?

11 (2) Schedule 2 of this Act - Guidelines, relevant to ss 6 and ss7.


What do the Guidelines in Schedule 2 tell us re what to regard when assessing reasonableness? (5)

a) strength of bargaining positions of parties
b) whether customer induced to agree to term
c) whether customer knew/ought to know the existence of the term
d) where reasonable for contract to limit liability if a condition were not complied with
e)whether goods were manufactured, processed or adapted to the special order of the customer


Case for reasonableness, Held? Judge, Court, Maj?

HELD: whether exemption clause is reasonable is equated to concept of judicial discretion. Factual question, governed by few legal rules.
George Mitchell (Chester Hall) Ltd. v Finney Lock Seeds Ltd (1983) Lord Bridge, HL, Maj.


George Mitchell (Chester Hall) Ltd. v Finney Lock Seeds Ltd (1983) Lord Bridge, HL, Maj; Quote?

How to quantify Reasonableness: ‘the appellate court should treat the original decision [of the trial judge] with the utmost respect and refrain from interference with it unless satisfied that it proceeded on some erroneous principle or was plainly and obviously wrong’ - little precedent value in decisions themselves as based on fact.


George Mitchell (Chester Hall) Ltd. v Finney Lock Seeds Ltd (1983) followed in? (2)

Phillips Products Ltd v Hyland [1987] Thompson v T. Lohan Plant Hire Ltd [1987]
Both cases tried to transfer liability from TF to third party. Dramatically differing conclusions - because of different factual matrix.


Equality of bargaining power - Schedule 2 Guidelines: (a) case?

Watford Electronics Ltd v. Sanderson CFL Ltd [2001] HELD clauses reasonable because negotiated between 2 experienced businessmen of equal bargaining power.


Granville Oil & Chemicals Ltd v. Davies Turner & Co Ltd [2003]
Tucker LJ, quote?

‘The 1977 Act obviously plays a very important role in protecting vulnerable consumers from the effects of draconian contract terms. But I am less enthusiastic about its intrusion into contracts between commercial parties of equal bargaining strength, who should generally be considered capable of being able to make contracts of their choosing and expect to be bound by their terms.’


Possible to exclude liability for seller's implied undertakings as to title (i.e. implied terms?) s 12 Sales of Goods Act 1979 (UCTA s 6(1)?

s 6 (1) There is liability for breach of implied terms under section 12 SGA 1979.


Where is it impossible to exclude or restrict liability for breach of obligations arising from ss 13, 14, 15 of SGA 1979?

A consumer


To what extent is it possible to exclude liability for breach of these implied terms with non consumer? (s 6. 3)

Only insofar as the term satisfies the requirement of reasonableness.


When does a part "deal as a consumer"? s 12(1)

12, 1 a) neither makes contract in course of business, nor pretends to do so
b) other party does make contract in course of business
c) ordinarily supplied for private use/consumption


Case which distinguishes between transactions integral to relevant party's business (s 12, 1) and those that are incidental:

R & B Customs Brokers Co. Ltd v United Dominions Trust Ltd [1988], Dillon LJ.
FACTS: Pl company bought car from def company, incidental to business. Was only 2/3 car acquired by pls, not sufficiently regular, didn't take sale outside of consumer transaction for UCTA.


How are incidental transactions to a business regarded as within the "course of business"?

With sufficient regularity. R & B Customs Brokers Co. Ltd v United Dominions Trust Ltd [1988] 1 WLR 321 (CA)


"Course of business" interpreted differently in s 14 (2) SGA 1979. Case

Stevenson v Rogers [1999] - fisherman sold boat he bought 5 years earlier. AC HELD was a one-off sale in the course of business, an implied condition re quality. Thereby widened application os s 14 SGA. Sale is within course of business unless transaction is purely private in nature, doesn't exclude incidental sales


R & B Customs approach criticised in which case?

Feldaroll Foundry plc v Hermes Leasing (London) Ltd [2004]
HELD: applied test from UCTA context, found that a car purchased by a company for the use of the company director was to be treated as a consumer transaction. Company entitled to reject car despite exemption clause.


When does s 3 apply?

When one party deals as consumer or on other's written standard terms of business.


Can s3 exclude liability for breach of contract? (s3, 2a)

Cant exclude or limit liability re breach when himself in breach of contract


What does s 3 (2b) prevent a party from doing?

i) Can't claim to be entitled to render contractual performance substantially different from that reasonably expected
ii) re whole or any part of contractual obligation, to render no performance at all.