Unfair Contract Terms Act 1977

Unfair Contract Terms Act 1977

The Unfair Contract Terms Act 1977 is a British Act of Parliament (1977, c 50) which regulates contracts by restricting the operation and legality of some contract terms. It extends to nearly all forms of contract and one of its most important functions is limiting the applicability of disclaimers of liability. The title is misleading as it creates obligation in tort and contract. 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".

It is normally used in conjunction with the Unfair Terms in Consumer Contracts Regulations 1999 (Statutory Instrument 1999 No. 2083), [as amended by the Unfair Terms in Consumer Contracts (Amendment) Regulations 2001 (Statutory Instrument 2001 No. 1186) which merely further defined a 'Financial Service Authority'] as well as the Sale of Goods Act 1979 and the Supply of Goods and Services Act 1982.

Terms rendered ineffective

Negligence. s2(1), liability for negligence occasioning death or personal injury cannot be excluded.

Manufacturers' guarantee. s5(1), loss arising from (a) defective goods or (b) negligence of distributor; cannot be excluded where goods are "of a type ordinarily supplied for private use or consumption.

Sale of Goods
*s6(1), implied terms as to title (Sale of Goods Act 1979 s12) cannot be excluded.
*s6(2), implied terms as to description, quality or sample (Sale of Goods Act 1979 ss13-15) cannot be excluded "against a consumer".

terms governed by the Consumer Protection Act 1987.

They are also governed (since 2007) by the Occupiers Liability Act 1984.

Terms subject to reasonableness

Negligence. s2(2), exclusion of liability for negligence (other than for death or personal injury) must satisfy the requirement of "reasonableness".

Contractual Liability. s3, This applies against a party that ed a standard form contract where the other party is a "consumer". Exclusion of breach of the same contract (s3(2)(a)) or performance of which is substantially or totally different of that which is resonably expected of him (s(3)(b)).

Indemnity clauses. s4, A party dealing as a "consumer" cannot contract to indemnify a third party on behalf of the other party, except insofar as it satisfies the requirement of "reasonableness".

Sale of Goods. s6(3), Implied terms as to description, quality and sample (Sale of Goods Act 1979 ss 13-15) may only be reasonably excluded where neither party is dealing as a "consumer".

Misrepresentation. s8, substitutes the Misrepresentation Act 1967 s3. Under that post-1979 section, an exclusion of liability for misrepresentation must be satisfy the requirement of reasonableness.

Definition of "consumer" and "business"

Business. s 1(3), The Act only applies to "liability for breach of obligations or duties arising (a) from things done or to be done by a person in the course of a business (whether his own business or another's); or (b) from the occupation of premises used for business purposes of the occupier". s14, Includes any government department.

Consumer. s 12As amended by the Sale and Supply of Goods to Consumers Regulations 2002] , A party deals as a consumer if
*s12(1)(a), He is not in the course of a business and does not hold himself to do so.Holding himself is important as an otherwise consumer may attempt to act in the guise of a business for tax benefits or to shop at wholesale stores]
*s12(1)(b), the other party is in the course of a business.
*s12(1)(c), In Sale of Goods contract, the goods are of a type "ordinarily supplied for private use or consumption" (s12(1A), this subsection does not apply to individuals)
*s12(2), A party is not a consumer if dealing at an auction where he has the opportunity to attend in person or is not a natural person buying auction.
*s12(3), Burden is upon the party purported to be acting in the course of a business to show that either he is not in the course of a business or that the other party is otherwise not a consumer

Definition of "reasonableness"

Section 11 provides some guidance but most development has been in common law

Schedule 2 gives guidelines specifically to ss 6(3), 7(3), 7(4).

Common Law
*"Stewart Gill Ltd. v Horatio Myer & Co. Ltd." [1992] 2 All ER 257] provides that reasonableness is assessed at the time of contract; and that the burden of proof is upon the party purporting to have excluded liability.
*"Levison v Patent Steam Carpet Cleaning Co. Ltd." [1977] 3 WLR 90] provides that clarity and preciseness will raise the reasonableness of a term; and vice versa. See also Stag Line Ltd. v Tyne Ship Repair Group Ltd. [1984] 2 Lloyd's Rep 211] as to small print (literally; size-wise).
*"Smith v Eric S Bush" [1990] 1 AC 831] . Lord Griffith provides 4 points that may be considered... (see application in St Albans City and District Council v International Computers Ltd.(1996) "The Times" 14th August] ).
**Equality of Bargaining Powers.
**How practical was it to obtain independent legal advise regarding the term?
**How difficult is the task being for which liability is being excluded?
**What are the practical consequences of ruling that a term is unreasonable?

ee also

* Standard form contract
* Unfair Terms in Consumer Contracts Regulations 1999
* Electronic Commerce Regulations 2002
* "Office of Fair Trading v Abbey National and Others (2008)" - Bank charges test case


Wikimedia Foundation. 2010.

Look at other dictionaries:

  • Unfair Contract Terms Act 1977 — (UCTA) A statute which imposes limits on the extent to which liability for breach of contract, negligence or other breaches of duty can be avoided by means of contractual provisions such as exclusion clauses. Practical Law Dictionary. Glossary of …   Law dictionary

  • unfair contract terms — Contractual terms relating to the exclusion or restriction of a person s liability that, under the Unfair Contract Terms Act 1977 and Unfair Terms in Consumer Contracts Regulations 1999, are either ineffective or effective only so far as is… …   Big dictionary of business and management

  • unfair contract terms — certain provisions in contracts (and in some non contractual provisions) that are controlled by legislation because they are unfair (as defined). In UK law, provision is now made to regulate unfair contract (and other) terms by the Unfair… …   Law dictionary

  • Unfair Terms in Consumer Contracts Regulations 1999 — The Unfair Terms in Consumer Contracts Regulations 1999, SI 1999/2083, incorporatesEnacted persuant to European Communities Act 1972] Directive 93/13/EC [(1993) L95 OJ 29] into law of the United Kingdom. Repeals The Unfair Terms in Consumer… …   Wikipedia

  • English contract law — is an influential system regulating the law of contract that operates in England and Wales. Its doctrines form the basis of contract law across the Commonwealth, including Australia, Canada, India, New Zealand and South Africa and more generally… …   Wikipedia

  • Occupiers' Liability Act 1984 — Parliament of the United Kingdom Long title An Act to amend the law of England and Wales as to the liability of persons as occupiers of premises for injury suffered by persons other than their visitors; and to amend the U …   Wikipedia

  • Sale of Goods Act 1979 — The Sale of Goods Act 1979 is a British Act of Parliament (1979, ch 54) which regulates contracts in which goods are sold and bought. The Act consolidates the Sale of Goods Act 1893 and subsequent legislation, which in turn consolidated the… …   Wikipedia

  • Contracts (Rights of Third Parties) Act 1999 — Contracts (Rights of Third Parties) Act, 1999 Parliament of the United …   Wikipedia

  • Standard form contract — Contract law Part o …   Wikipedia

  • standard form contract — a contract that is not specially set out for the transaction in question but is drawn up in advance and applied to numerous transactions. Such contracts are not defined in the unfair contract terms Act 1977 but controlled by it. See McCrone v.… …   Law dictionary

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”