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Contract: Terms

Statutory control of exclusion and unfair terms

  • 3 things to know
  • A2 Units 3 and 4

Overview

Recall questions on liability for negligence and written standard terms, the reasonableness test, George Mitchell, Smith v Eric S Bush and Watford Electronics, the fairness test, and enforcement.

What you need to know

Answer each one before you reveal it.

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Key term

Which consumer rights may a trader never exclude under the Consumer Rights Act 2015?

Numbers

Which statute controls exclusion clauses in consumer contracts and which controls them between businesses?

Key term

What does section 2 of the Unfair Contract Terms Act 1977 provide about liability for negligence?

Questions from this subtopic

Each one with the model answer underneath.

  1. 1

    Which statute controls exclusion clauses in consumer contracts and which controls them between businesses?

    Model answer

    Since 1 October 2015 the Consumer Rights Act 2015 controls terms in contracts between a trader and a consumer, while the Unfair Contract Terms Act 1977 controls them in contracts between businesses.

  2. 2

    What does section 2 of the Unfair Contract Terms Act 1977 provide about liability for negligence?

    Model answer

    Liability for death or personal injury resulting from negligence cannot be excluded or restricted at all, and liability for any other loss caused by negligence can be excluded only so far as the term satisfies the requirement of reasonableness.

  3. 3

    What control does section 3 of the Unfair Contract Terms Act 1977 impose on written standard terms?

    Model answer

    Where one party deals on the other's written standard terms, a clause excluding liability for breach, or allowing performance substantially different from what was expected, is effective only if it is reasonable.

  4. 4

    State the reasonableness test in section 11 of the Unfair Contract Terms Act 1977.

    Model answer

    The term must have been a fair and reasonable one to include having regard to the circumstances that were, or ought reasonably to have been, known to the parties when the contract was made.

  5. 5

    Give three of the guidelines in Schedule 2 to the Unfair Contract Terms Act 1977.

    Model answer

    The court considers the relative bargaining strength of the parties, whether the customer received an inducement such as a lower price for accepting the term, and whether the customer knew or ought to have known of the term's existence and extent.

  6. 6

    Why was the limitation clause held unreasonable in George Mitchell v Finney Lock Seeds (1983)?

    Model answer

    The clause limited liability to the price of the seed, £201.60 for 30 lb, against a crop failure costing some £61,000, and since the seed merchants were at fault and could insure against the risk the clause was not fair and reasonable.

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Law Making in Wales and the UK
Delegated Legislation
Statutory Interpretation
Judicial Precedent

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Roles v Nathan ( ).
196319411945

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AThe defendant owed the victim a duty of care and breached it.
BThe breach carried a reasonably foreseeable risk of death.
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Pecuniary loss is financial and measurable.
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