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Contract law

The statutory rules

If a clause passes the common law rules it must also satisfy the statutory rules
namely under:

 The Unfair Contract Terms Act 1977

 The Consumer Rights Act 2015

The Unfair Contract Terms Act 1977 (UCTA) applies to exclusion clauses in
contracts made in the course of a business.

It states that a clause exempting liability for

 Death or personal injury due to negligence is void.

 Other loss due to negligence is void unless reasonable.

The party seeking to rely on the clause has to prove that it is reasonable and to help
the courts decide there are various matters to take into consideration such as the
strength of the bargaining parties, whether the buyer received any inducement to
agree to the term, whether the buyer knew or ought to have known about the term
and the ability of the party to insure against liability.

The Consumer Rights Act works applies to terms in a contract where the seller is
acting in the course of a business and the other party is a consumer. The Act states
that terms in contracts between a consumer and a business must be ‘fair’.

When considering whether a term is 'fair', a number of factors will be considered
including:

 Does the clause put the consumer at a disadvantage?

 Were any relevant circumstances when the contract was signed?

 What is the nature of the contract itself?

 Is the clause stated in plain, intelligible language?

 Are any relevant terms prominent?

The test is whether an average consumer who is reasonably well-informed,
observant and circumspect would be aware of the term.

If such a term is unfair it will not be binding on the consumer, though the consumer
will still be able to rely on any such terms against the business.

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