Contract Law - Lecture 15b - Exclusion Clauses Statutory Controls · Unfair Contract Terms Act 1977 (UCTA)- now applies only to Business to Business Contracts. . Consumer Rights Act 2015- which replaces the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCR). UCTA 1977 . Concerned primarily with 'business liability' . .... breach of obligations arising (a) from things done or to be done in the course of a business ... or (b) from the occupation of premises used for the business purposes of the occupier.' - sec 1(3) · 'Business' includes professions, government departments, local government, public authorities - sec 14 UCTA 1977 - negligence liability · Sec 1(1) - covers tortious negligence and contractual negligence. · Sec 2 (1) -A person cannot by reference to any contract term or to a notice given to persons generally or to particular persons exclude or restrict his liability for death or personal injury resulting from negligence. . Sec 2 (2)-In the case of other loss or damage, a person cannot so exclude or restrict his liability for negligence except in so far as the term or notice satisfies the requirement of reasonableness.' Strict Liability in contract . UCTA, sec 3 - applies where one party deals on the other's written standard terms. · Example: . Bigs Ltd contracts with Smalls Ltd on Smalls Ltd.'s standard terms - sec 3 applies. Effect of Section 3 · " ... as against that party, the other cannot by reference to any contract term: (a) when himself in breach of contract, exclude or restrict any liability of his in respect of the breach; or (b) claim to be entitled: · (i) to render a contractual performance substantially different from that which was reasonably expected of him; or · (ii) in respect of the whole or any part of his contractual obligation, to render no performance at all, . except in so far as (in all of the cases mentioned above in this sub-section) the contract term satisfies the requirement of reasonableness.' Requirement of reasonableness . UCTA sec 11(1) - 'Fair and reasonable' to include in the contract. . Sec 11(4) where the clause limits monetary liability, consideration should be had to: · Resources available to defendant
· Availability of insurance · Sec 11(5) - burden of proof on defendant. · Schedule 2 factors- applies to supply of goods contracts (ss. 6 & 7) but can be used more widely in determining reasonableness. Schedule 2 - relevant factors · Strength of bargaining position. Watford Electronics Ltd v Sanderson CFL [2001] · Did claimant receive an inducement (e.g. discount) to agree to clause? · Claimant's knowledge of the term and its extent. . Reasonable to comply with condition which, if not complied with, leads to exclusion e.g. time limit for complaint- RW Green Ltd v Cade Brothers Farms [1978] 1 Lloyds Rep. 602 · Contract specially tailored to claimant's needs - e.g. goods manufactured to order. Cases on reasonableness · Pre-UCTA George Mitchell v Finney Lock Seeds (1983)