Term
| What does Unfair Contract Terms Act deal with? |
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Definition
It ONLY deals with exemption clauses in a business liability context (B2B or B2C, not C2C e.g. selling on ebay). ONLY APPLIES TO CASES WHERE THERE IS SOMEONE ACTING IN A BUSINESS CONTEXT It DOES NOT DEAL with unfair contract terms.
(COVERS BOTH CONTRACTUAL AND TORTIOUS LIABILITY) |
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Term
| How does UCTA define negligence? |
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Definition
| Breach of any term to take 'reasonable care or exercise reasonable skill' |
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Term
| How do s13 SGSA 1982 and s1(1) UCTA interact? |
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Definition
s13 SGSA says that all service contracts have the implied term that the service will be carried out with 'reasonable care & skill'.
s1(1) UCTA defines negligence as 'breach of any term to take reasonable care or exercise reasonable skill'.
THEREFORE, any breach of s13 SGSA will be treated as negligence. |
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Term
| UCTA applies to business liability. How does the act define business liability? (note, the definition of business is also relevant w.r.t the victim, as in some places UCTA treats business victims differently from consumer victims) |
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Definition
s1(3)'Liability arising from things done in the course of business AND from the occupation of business premises.'
ALSO...
s14 'business includes a profession and the activities of any government department or local or public authority'
NOTE - THERE IS ALSO CASE LAW ON 'WHAT IS A BUSINESS FOR THE PURPOSES OF UCTA' |
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Term
| How does UCTA define what it is to be 'dealing as a consumer'? |
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Definition
WHERE NOT DEALING IN THE COURSE OF BUSINESS AND OTHER PARTY IS DEALING IN THE COURSE OF BUSINESS - note, additional bits (below + see statute) + case law
s12 - 'A person to a contract deals as a consumer in relation to another party if -
a) he neither makes the contract in the course of business, nor holds himself out as doing so
b) the other party does make the contract in the course of business
c) in the case of a contract... (see the rest of the act. |
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Term
| When trying to identify whether someone is dealing as a consumer, what should you do? |
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Definition
1) go to the statute
NEXT...
2) go to the case law |
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Term
| R&B Customs Brokers v United Dominions Trust [1988] |
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Definition
CASE WHICH SET OUT THE TEST FOR DETERMINING WHETHER SOMEONE IS DEALING AS A CONSUMER
Case about purchasing a company car, by a company, for the director.
ISSUE = was the company acting as a consumer?
HELD - company was acting as a consumer
1) the purchase of the car was not integral to the business
2) it wasn't happening with regularity
3) The care was being used for both personal and work purposes |
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Term
| What is the R&B Customs Brokers [1988] test? |
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Definition
1)Is the purchase integral to the business
2) Is this type of purchase made frequently?
3) Is the item purchased used for business purposes? |
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Term
| Which case confirms that the R&B test is to be used when determining a consumer for the purposes of UCTA? |
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Definition
| Feldaroll Foundry plc v Hermes Leasing [2004] |
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Term
| Feldaroll Foundry plc v Hermes Leasing [2004] |
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Definition
CONFIRMED R&B TEST FOR DETERMINING CONSUMER FOR UCTA
Public company purchasing a car for a director. HELD = acting as a consumer
1) integral to the business
2) Done with frequency
3) Used for business purposes |
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Term
| Why is the test for establishing whether a person is acting as a consumer for UCTA so relaxed? |
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Definition
Because UCTA is VERY harsh on businesses - this creates problems, especially for small businesses.
Small businesses = a v. relevant factor |
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Term
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Definition
It basically says that just because a term/clause doesn't clearly state that it is excluding/limiting liability/remedies/procedure etc., if the effect of it is to do just that, then it will be treated as an exemption clause.
(GREAT EXAMPLE - IF YOU HAVE TO JUMP THROUGH LOTS OF HOOPS TO CLAIM A REFUND (e.g. post something off by 1st class then make phone calls etc...) THEN THE EFFECT OF THIS CLAUSE WILL BE TO LIMIT LIABILITY - BECAUSE IT MAKES IT SO HARD TO MAKE A CLAIM |
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Term
| Stewart Gill v Horation Myer [1992] |
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Definition
WHAT MAY NOT EXPLICITLY BE AN EXCLUSION CLAUSE MAY IN ACTUAL FACT BE FOUND TO BE AN EXCLUSION CLAUSE
CLAUSE HELD TO BE EXCLUDING A RIGHT, AND PROCEDURE
C had purchased an overhead conveyoeur-belt
Conveyour-belt didn't work
C wanted to rely on the right of set-off (right to withold payment to cover the breach)
However, contract stated that money could not be held and set off
HELD - the right of set off is a right. Therefore, the contract was excluding a right. AND, in order to enforce the right of set-off, you have to go to court. Therefore, the contract was also excluding procedure (right to go to court)... therefore, the clause was subject to UCTA, I assume it failed the reasonableness test... |
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Term
| Which section of UCTA excludes what liability? |
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Definition
s2 = liability for negligence
s3 = liability for breach of express terms in the contract
s6 = liability for breach of a term implied by SGA or SGSA |
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Term
| If a seller gave a description of an item. Then the contract expressly states that the item will be like this. However, it also includes a term which excludes liability for if the item doesn't match the description. If when you get the item, it doesn't match the description, when dealing with the exemption clause, what part of what act would you go to? |
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Definition
| s3 UCTA - which deals with clauses which limit/exclude liability for express terms in the contract. |
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Term
| If a seller gives a description of an item. But the contract makes no reference to the description. However, the contract excludes liability for if the item doesn't match the description. Which part of which act would you go to? |
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Definition
| s6 UCTA - which deals with clauses which limit/exclude liability for terms implied into a contract by SGA (and SGSA) |
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Term
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Definition
s1 - YOU CANNOT EXCLUDE OR RESTRICT LIABILITY FOR DEATH OR PI RESULTING FROM NEGLIGENCE (NOTE: also covers non-contractual clauses)
s2 - can exclude liability for other loss or damage, HOWEVER, subject to the reasonableness test (s11) |
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Term
| If you have an exemption clause which excludes/limits liability for negligence, what part of what act do you refer to? |
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Definition
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Term
| Which part of UCTA defines personal injury? |
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Definition
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Term
| Which part of UCTA provides the 'reasonableness test'? |
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Definition
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Term
| What is the reasonableness test? |
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Definition
s11 UCTA
To pass... 'the term shall have been a fair and reasonable one to be included having regard to the circumstances which were, or ought reasonably to have been, known to or in the contemplation of the parties when the contract was made.' |
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Term
| What is the useful story the contract lecturer told us w.r.t applying the reasonableness test? |
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Definition
REGARDLESS OF THE CURRENT POSITION, GOES BACK TO THE CIRCUMSTANCES AT THE TIME THE CONTRACT WAS MADE
Story of a tiny hot dog 1-man company. Approached by pret. Pret offers man a huge contract to supply loads of hot dogs. Hot dog man agrees & signs contract. Ten years later, the hot dog man's company has grown and is not the mcdonalds of hot dogs. Pret does something worng & hot dog man wants to sue. However, in the contract = exclusion clause which the hot dog man now understands, but at the time of contracting didn't. In this case, the courts will look to the hot dog mans knowledge at the time (from perspective of the reasonable man)... therefore, it is all to do with the parties' position AT THE TIME OF CONTRACTING.
ALSO APPLICABLE TO OTHER THINGS... E.G. WHEN THE CONTRACT WAS MADE, DID PEOPLE KNOW WAR WOULD BREAK OUT? HAD THE IPOD BEEN INVENTED? ETC... |
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Term
| What does s11(2) UCTA say? |
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Definition
| It refers you to schedule 2 for further guidance on the reasonableness test. NOTE - s11(2) says it is only applicable to SGA issues, however case law has since changed this. SCHEDULE 2 NOW APPLIES TO ANY QUESTION OF REASONABLENESS W.R.T UCTA. |
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Term
| What does s11(4) UCTA do? |
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Definition
It adds in extra things that must be considered when assessing the reasonableness of a limitation clause.
For limitation clauses, you also have to consider the considerations in schedule 2, as s11(4) says 'without prejudice to subsection 2' |
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Term
| In applying the reasonableness test to limitation clauses, what are the two extra considerations one must make (provided by s11(4) |
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Definition
w.r.t the person who wishes to restrict liability (proferens), one must consider:
a) the resources which he could expect to be available to him for the purpose of meeting liability should it arise, AND
b) how far it was open for him to cover himself by insurance |
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Term
| On whom does the burden of proving reasonableness lie? |
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Definition
| Burden of proving that a contract term is reasonable rests upon the person claiming that it is (s11(5) |
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Term
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Definition
| The burdeon of proving that a contract term is reasonable rests upon the person claiming that it is (s11(5) |
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Term
| s11(2) says that the schedule 2 guidelines on the reasonableness test are ONLY applicable to SGA cases. However, this has since been changed by case law. Which case changed this? |
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Definition
| Stewart Gill v Horatio Myer [1992] |
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Term
| Stewart Gill v Horatio Myer [1992] |
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Definition
| THE GUIDELINES CONTAINED WITHIN SCHEDULE 2 - ON THE REASONABLENESS TEST - ARE OF GENERAL APPLICATION TO THE REQUIREMENT OF REASONABLENESS (not only applicable to SGA cases, applicable to all cases) |
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Term
| Schedule 2 UCTA provides things to consider when applying the reasonableness test... What are they? |
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Definition
a) Strength of the bargaining positions
b) Inducement to agree to term (if you were induced & received something extra = unlikely that you can claim it is unreasonable)
c) Knowledge of the term (if you did / should have known about the term, then it is unlikely that you can argue it is unreasonable)
d) Does the exemption clause exclude liability ONLY if a particular condition has been complied with & at the time of making the contract it was unreasonable to expect that that condition wouldn't be complied with (e.g. if you sit on this chair, we won't be liable = unreasonable condition)
e) Was the item specially ordered / made, have you had discussions with the people who provided them - if so, you won't be able to argue standard terms and conditions, therefore, can't argue unreasonable |
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Term
| George Mitchell v Finney Lock Seeds [1983] |
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Definition
CASE IN WHICH THE REASONABLENESS TEST WAS APPLIED
WHETHER OR NOT AN EXEMPTION CLAUSE / LIMITATION CALUSE IS REASONABLE DEPENDS ON THE FACTS OF THE CASE (a bit like innominate)
C = farmer who purchased £200 worth of cabbage seeds
None of the seeds grew
Contract contained limitation clause, which limited liability to the cost of the seeds
Because the farmer had not crop that year, he actually lost £65,000 (expectation)
HELD - £200 for seeds AND a crop which doesn't grow = cotastrophe for the farmer. Farmer isn't expected to insure for this type of loss, but the seed seller is (seed seller should insure for defective seeds, farmer shouldn't), no individually negotiated terms. Unreasonable to limit his damages to only £200. Therefore, farmer won.
so, e.g. if the |
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Term
| Watford Electronics v Sanderson [2001] |
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Definition
CASE IN WHICH AN EC WAS HELD TO BE REASONABLE
C purchased bespoke CPU system
Exemption clause
C lost millions
HELD - exemption clause was fair, because:
a) experienced business men
b) companies of equal power
c) equal resources (e.g. both could have checked with their lawyers. |
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Term
| St Albans v International Computers [1995] |
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Definition
POLICY DECISION - KEY, SHOWS THAT THE COURTS ARE WILLING TO MAKE A DECISION ON THE BASIS OF POLICY
LIMIATION CLAUSE, D SHOULD HAVE BEEN INSURED
C contracted for CPU system with D
D made an error & C lost £1million
Limitation clause limited liability to £100,000
HELD - unreasonable limitation clause. Because D should be insured + if C lost, taxpayer would have to pay, whereas D had huge amount of resources at their disposal. |
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Term
| If a contract explicitly states something, which would otherwise be implied by SGA/SGSA... and the contract also includes an EC/LC on liability for breach of that term (not including negligence)... which part of UCTA do you go to? |
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Definition
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Term
| If you have concerning a B2B transaction/contract, what happens if the contract contains an express term & an EC/LC for liability in the event of breach of that term... what can you do? |
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Definition
| NOTHING - s3UCTA is only applicable to B2C contracts. B2B is expected to me experienced enough & to have enough resources to ensure they get commercially fair contracts. |
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Term
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Definition
In B2C contracts, you can only:
a) exclude/restrict liability or,
b) claim to be entitled to render a contract performance substantially different / allow for no performance
IF - the term which allows any of these things to happen satisfies the test for reasonableness |
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Term
| At a basic level, what does s6 UCTA deal with? |
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Definition
| EC & LCs for liability relating to breach of any of the implied terms of SGA (note: relevant for SGA AND SGSA - for SGSA, look at corresponding terms, e,g. title & description) |
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Term
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Definition
s6(1) = You cannot exclude/restrict obligations arising under s12SGA
s6(2) = for B2C contracts, you cannot exclude/restrict obligations arising under ss13, 14 or 15 SGA (+ corresponding SGSA) (only applicable to B2C, NOT B2B)
s6(3) = in B2B contracts, the liability specified in s6(2) can be excluded/limited to the extent that the term which does so satisfies the reasonableness test |
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Term
| In a B2B contract, can obligations arising under ss13, 14 or 15 SGA ever be excluded/limited? (+ corresponding SGSA) |
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Definition
| YES - s6(3) UCTA - only in so far as the term which does so satisfies the reasonableness test. |
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Term
| If you are a consumer dealing with a business, and the business says 'we've excluded liability for s14 of SGA' what would you say? |
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Definition
| You'd turn around and say NO, you can't, s6(2) UCTA says you can't. |
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Term
| If you're a business in a b2b contract and the other business says 'we've excluded liability for s14 of SGA' what would you say? |
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Definition
| Does the term which does so satisfy the reasonableness test? |
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Term
| What part of the SGSA is the only part we really look at? |
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Definition
s13 - reasonable care and skill.
Remember the UCTA definition of negligence. |
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