common law 2bc

7/30/2019 Common Law 2bc

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Students name: Nguyen Hoang Loc Anderson.

2B.

The Unfair Contract Terms Act 1977 is an Act of Parliament of the United Kingdom which

regulates contracts by restricting the operation and legality of some contract terms. It extends tonearly all forms of contract and one of its most important functions is limiting the applicability of

disclaimers of liability. The terms extend to both actual contract terms and notice that are seen to

constitute a contractual obligation.

The Act renders terms excluding or limiting liability ineffective or subject to reasonableness,

depending on the nature of the obligation purported to be excluded and whether the party

purporting to exclude or limit business liability, acting against a consumer.(Wikipedia)

The Unfair Contract Terms Act 1977 applies only to liability arising in the course of a business.

It does not therefore provide comprehensive protection against unfair terms. Also it provides for

specific instances of unfair terms. In particular, penalty clauses are outside its remit. The Unfair

Contract Terms Act provides different levels of protection. Some provisions provide absolute

protection whereas some will be subject to a consideration of whether the term was a reasonable

one to include. The Unfair Contract Terms Act extends beyond liability arising from contracts

and extends to tortuous liability arising from negligence or liability arising from the Occupiers

Liability Act 1957.

The main provisions of the Act are as follows:

Avoidance of liability for negligence: It provides that a business cannot exclude or restrict liability for death or personal

injury arising from negligence. This provision is absolute and not subject to the

requirement of reasonableness.

It provides that a business may exclude or restrict liability for other types of loss onlyif it is reasonable to do so. The question of what is reasonable is decided by applying

the reasonableness test set out the reasonableness test.

It provides that where a person is aware of an exclusion clause this is not to be takenas a voluntary acceptance of risk.

Avoidance of liability for breach of contract:The person who imposes the standard term, or who deals with the consumer, cannot,

unless the term is reasonable:

Restrict liability for his own breach or fundamental breach, Claim to be entitled to render substantially different performance or no performance

at all

Unreasonable indemnity clauses


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A clause whereby one party undertakes to indemnify the other for liability incurred in theothers performance of the contract is void if the party giving the indemnity is a

consumer, unless it is reasonable. This means if a person who is a consumer cannot be

made to pay an unreasonable indemnity arising from liability incurred as a result of

breach of contract.

Sale and supply of goods It is applies to contracts for the sale of goods and contracts of hire purchase. The

provisions relate to liability arising under the implied terms under the Sale of Goods

Act 1979 and the Supply of Goods (Implied Terms) Act 1973.

A party can never exclude liability relating to title - absolute - applies to bothconsumer and non-consumer sales.

In consumer sales a party can never exclude liability relating to description, quality,and fitness for purpose or sample - absolute.

In non-consumer sales a party can only exclude liability relating to quality,description, fitness for purpose or sample where it is reasonable to do so.

ConsumersA person deals as a consumer if:

He neither makes the contract in the course of a business, nor holds himself out asdoing so.

The other party does make the contract in the course of a business. The goods are of a type ordinarily supplied for privative use or consumption.

Where a business engages in an activity which is merely incidental to the business, the

activity will not be in the course of the business unless it is an integral part of it and it

will not be integral of it unless it is carried on with a degree of regularity.

Test of reasonable: The term is required to be a fair and reasonable one to include in the contract. This is judged by all the circumstance which were known, or ought to have been

known or in the contemplation of the parties

The fairness and reasonableness is decided at the time the contract is entered - notwith hindsight knowing of the events which in fact occurred

Where the term is restricting rather than excluding liability regard is to be had tothe resources of the party seeking to rely on the term and the availability of

insurance.

The burden is on the party seeking to enforce the term to show that it was fair andreasonable.

It provides the factors for the court to consider in applying the reasonableness test when

looking at non-consumer sales in relation to s.6 & 7 UCTA. The factors are:


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The strength of the bargaining positions of the parties taking into accountalternative suppliers available to the purchaser.

Whether the customer received an inducement to accept the term. Eg were theygiven the opportunity to pay a higher price without the exclusion clause.

Whether the customer knew or ought to have known of the term and whether suchterms are in general use in a particular trade.

Where exclusion relates to non performance of a condition whether it wasreasonably practicable to comply with the condition.

Whether the goods were made or adapted to the special order of the customer.(http://www.e-lawresources.co.uk)

Standard of contract:A standard form contract (sometimes referred to as an adhesion or boilerplate contract)is a contract between two parties where the terms and conditions of the contract are set

by one of the parties, and the other party is placed in a "take it or leave it" position with

little or no ability to negotiate terms more favorable to it. (Wikipedia)

Standard contracts may contain a multitude of terms and be pages long, or can be

straightforward documents which are simply designed to name the parties to an

agreement along with dates, subject matter and any special requirements.

Important features of standard form contracts are that they are:

usually written in favour of the party presenting them often used by large corporations, including financial institutions, which have

many clients, and are typically presented for contracts involving insurance, leases

and mortgages - but they are also used by the full range of business organisations

often used as an attempt to limit liability for damages, losses or delays by theparty presenting the standard form agreement, who is usually the bigger and

stronger party in the contract.

Once a standard form contract is signed or accepted it is presumed to have been read and

agreed to. Standard form contracts are often printed on the back of a standard business

document - order forms, invoices, quotations, delivery documents - usually in fine print.

They can be just as binding as a fully negotiated contract.

There are some advantages
http://www.e-lawresources.co.uk/http://www.e-lawresources.co.uk/http://www.e-lawresources.co.uk/http://www.e-lawresources.co.uk/

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