The Concentrate Questions and Answers series offers the best preparation for tackling exam questions. Each book includes typical questions, answer plans and suggested answers, author commentary, and other features. This chapter focuses on the regulation of exclusion/exemption clauses and other potentially unfair terms. It discusses both common law (such as approaches to incorporation and interpretation) and statutory regulation (such as the Unfair Contract Terms Act 1977 and the Consumer Rights Act 2015). It also explores two key debates: the nature of an exemption clause, and the tension between freedom of contract and judicial and statutory intervention in the context of exemption clauses.
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5. Exemption Clauses and Unfair Terms
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George Mitchell (Chesterhall) Ltd v Finney Lock Seeds Ltd [1983] 2 AC 803
Essential Cases: Contract Law provides a bridge between course textbooks and key case judgments. This case document summarizes the facts and decision in George Mitchell (Chesterhall) Ltd v Finney Lock Seeds Ltd [1983] 2 AC 803. The document also includes supporting commentary from author Nicola Jackson.
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Goodlife Foods Ltd v Hall Fire Protection Ltd [2018] EWCA Civ 1371
Essential Cases: Contract Law provides a bridge between course textbooks and key case judgments. This case document summarizes the facts and decision in Goodlife Foods Ltd v Hall Fire Protection Ltd [2018] EWCA Civ 1371. The document also includes supporting commentary from author Nicola Jackson.
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13. Exclusion Clauses
This chapter discusses one particular type of boilerplate clause, namely the exclusion or limitation clause. The chapter examines the role and function of exclusion and limitation clauses in modern commercial contracts. In order to perform its function an exclusion or limitation clause must (i) be validly incorporated into the contract, (ii) cover the loss that has been suffered, and (iii) survive scrutiny under the Unfair Contract Terms Act 1977. Difficult interpretative issues can arise where one party seeks to exclude liability in respect of its own negligence or exclude liability for fundamental breach. The Unfair Contract Terms Act 1977 applies a reasonableness test to a number of exclusion or limitation clauses. The 1977 Act is also examined, with particular reference to the types of clause that fall within its scope.
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8. Terms of the contract II: common law and statutory controls on unfair terms
Titles in the Core Text series take the reader straight to the heart of the subject, providing focused, concise, and reliable guides for students at all levels. This chapter examines potentially unfair terms, including exemption clauses, in a contract. It considers the common law’s response to exemption clauses and other potentially unfair terms, and discusses statutory schemes to regulate them. It covers the Unfair Contract Terms Act 1977 (UCTA) which governs exemption clauses in non-consumer contracts, subjecting them to a requirement of reasonableness where the contract was made on standard terms. It also discusses in detail the Consumer Rights Act 2015 (CRA), which regulates terms in consumer contracts, prohibiting certain exclusion clauses completely and imposing a general test of fairness upon all terms apart from the core terms.
Chapter
8. Terms of the contract II: common law and statutory controls on unfair terms
Titles in the Core Text series take the reader straight to the heart of the subject, providing focused, concise, and reliable guides for students at all levels. This chapter examines potentially unfair terms, including exemption clauses, in a contract. It considers the common law’s response to exemption clauses and other potentially unfair terms, and discusses statutory schemes to regulate them. It covers the Unfair Contract Terms Act 1977 (UCTA) which governs exemption clauses in non-consumer contracts, subjecting them to a requirement of reasonableness where the contract was made on standard terms. It also discusses in detail the Consumer Rights Act 2015 (CRA), which regulates terms in consumer contracts, prohibiting certain exclusion clauses completely and imposing a general test of fairness upon all terms apart from the core terms.
Chapter
13. Exclusion Clauses
This chapter discusses one particular type of boilerplate clause, namely the exclusion or limitation clause. The chapter examines the role and function of exclusion and limitation clauses in modern commercial contracts. In order to perform its function an exclusion or limitation clause must (i) be validly incorporated into the contract, (ii) cover the loss that has been suffered, and (iii) survive scrutiny under the Unfair Contract Terms Act 1977. Difficult interpretative issues can arise where one party seeks to exclude liability in respect of its own negligence or exclude liability for fundamental breach. The Unfair Contract Terms Act 1977 applies a reasonableness test to a number of exclusion or limitation clauses. The 1977 Act is also examined, with particular reference to the types of clause that fall within its scope.
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9. Statutory regulation of contracts
This chapter studies the features of legally binding contracts by examining the manner in which the terms of a contract are regulated through statutory intervention. Such legislative measures have come about as a response to the unequal bargaining positions of consumers as contracting parties in business contracts, and the idea that laissez-faire can be contrary to public policy and fairness, for example with certain exclusion clauses. Some examples include statutes such as the Consumer Rights Act 2015 and the Sale of Goods Act 1979 that imply terms into contracts, and the Unfair Contract Terms Act 1977 that regulates the parties’ use of exclusion clauses. This protects the weaker party to a contract from exploitation and provides minimum rights that may not be waived.
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12. The condition of the goods and statutory implied terms
This chapter tackles the condition of the goods and statutory implied terms. If the terms of the broken contract between the seller and buyer involve a condition, the buyer may be entitled to reject the goods and terminate the contract. Sections 12 to 15 of the Sale of Goods Act 1979 (SGA) indicate the conditions of implied terms. The chapter explains that implied terms require the goods supplied to conform to the buyer's legitimate expectations, which then may allow the buyer to complain about a breach if their expectations are not met. It also considers how the seller's power to exclude the implied terms, or liability for their breach, is limited by the Unfair Contract Terms Act 1977.
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28. International sale contracts
This chapter details the significance of international sale contracts. Since there is no formal special body of rules for international sales, an international sale contract is governed by English law while it is invariably governed by the general law of contract and the Sale of Goods Act 1979 (SGA). Thus, parties are free to agree on the terms of their bargain only if they are subjected to general law. Moreover, the Unfair Contract Terms Act 1977 does not apply to international supply contracts where the contracting parties have their places of business in different states. The chapter also considers the seller's obligations to the bill of lading.
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15. Exclusion clauses and unfair terms
This chapter analyses the law on exclusion clauses and unfair terms. Exclusion clauses are terms which exclude or limit a defendant’s liability. The enactment of the Unfair Contract Terms Act 1977 and the Consumer Rights Act 2015 has reduced the importance of common law techniques for avoiding the worst effects of exclusion clauses. Both statutes enable the courts to control the substance of the contract. The Unfair Contract Terms Act 1977 only applies to non-consumer contracts. It empowers a court not to enforce exclusion clauses where they are unreasonable. Unlike the Unfair Contract Terms Act 1977, the Consumer Rights Act 2015 is not limited to exclusion clauses. A term will be unfair if, ‘contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations under the contract to the detriment of the consumer’.
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7. Exemption Clauses and Unfair Terms
This chapter assesses exemption clauses and unfair terms. Exemption clauses are terms that either exclude or limit the liability of a party. The law relating to the use of such clauses is a mixture of rules found in both the common law and legislation; the common law rules apply to all contracts. In addition, the Unfair Contract Terms Act 1977 applies to the use of exemption clauses in contracts between two businesses. For consumers, the Consumer Rights Act 2015 provides wider protection from unfair terms including exemption clauses. The practical context of exemption clauses is simple. One party will be in breach and so the other will seek compensation for the loss caused by the breach. The party in breach will then defend the action by relying on an exemption clause. The dispute is then about whether or not the clause can be relied upon. The circumstances in which terms might be assessed for being ‘unfair’ can be wider than this. Typically, a business will take action against a consumer following the consumer’s failure to perform an obligation, which will then prompt the consumer to challenge the obligation as based on an unfair term.
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9. Unfair terms
This chapter examines unfair terms and exclusion clauses in a contract. It explains that exclusion and limitation clauses can be used by the parties to exclude or limit their liability and that they are regulated by statute and common law. It highlights the fact that an exclusion clause can only be effective if it is incorporated into a contract and if it was brought to the other party’s attention prior to the contract being formed. This chapter also discusses the relevant provisions of the Unfair Contract Terms Act 1977 and the Consumer Rights Act 2015, and ongoing efforts to clarify the law in this area.
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11. Direct control over terms
This chapter examines direct legal controls over the contents of contracts, with particular emphasis on the Unfair Contract Terms Act 1977 (UCTA) and the Consumer Rights Act 2015 (CRA). The pattern of control under UCTA and CRA is discussed, compared, and contrasted in terms of: the types of contracts covered; the parties who can benefit from, or be detrimentally affected by, the contract; the types of terms subject to control; the control mechanisms such as of outright invalidity and a test of reasonableness or fairness; and the enforcement mechanism, whether by the individual complainant or by a statutory body. Other statutory and common law controls of terms are also briefly discussed, as is the question of whether control of substantive unfairness by contract law can be justified.
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6. Exemption clauses and unfair contract terms
Robert Merkin KC, Séverine Saintier, and Jill Poole
Poole’s Casebook on Contract Law provides a comprehensive selection of case law that addresses all aspects of the subject encountered on undergraduate courses. This chapter deals with exemption clauses and unfair contract terms. An exemption clause is a term in a contract or notice that can be either an exclusion clause (excluding liability or remedies) or a limitation clause (limiting liability to a specified sum). The chapter primarily focuses on the requirements that must be satisfied before an exemption clause can be relied upon, the question of construction and the natural and ordinary meaning of the clause, contra proferentem, liability for negligence, limitation clauses, inconsistent terms, and fundamental breach. It then examines the legislative regulation of exemption clauses, emphasizing the growing distinction between commercial and consumer contracts in this context. It considers in some depth the enforceability of exemption clauses in a B2B context in accordance with the Unfair Contract Terms Act 1977 and its interpretation in case law. In the B2C context, it discusses control of unfair terms in accordance with Part 2 of the Consumer Rights Act 2015 and the case law interpreting the previous legislative regulation of unfair terms.
