7. Exemption Clauses and Unfair Terms

2021 ◽  
pp. 202-246
Author(s):  
André Naidoo

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.

Author(s):  
Elizabeth Macdonald ◽  
Ruth Atkins ◽  
Jens Krebs

This chapter begins the discussion of unfair terms. It deals with the common law rules relating to exemption clauses, and introduces the problems, as well as the benefits of standard form contracts. It looks at the common law rules dealing with incorporation and construction (interpretation) generally, and their use by the courts to deal with unfair exemption clauses, and the evolution of the use of such approaches in the light of legislative policing. In particular, it deals with incorporation by signature, notice (including the ‘red hand rule’), and a course of dealing, and looks at construction post-UCTA (Unfair Contract Terms Act 1977), and post-Investors, including the Canada Steamship rules and the distinction between limitation and exclusion clauses. The tension between freedom of contract and protecting the party with weaker bargaining power is emphasized. The chapter addresses how the Consumer Rights Act 2015 has impacted the law.


2021 ◽  
pp. 120-141
Author(s):  
Jill Poole ◽  
James Devenney ◽  
Adam Shaw-Mellors

Each Concentrate revision guide is packed with essential information, key cases, revision tips, exam Q&As, and more. Concentrates show you what to expect in a law exam, what examiners are looking for, and how to achieve extra marks. This chapter discusses the use and enforceability of exemption clauses (total exclusion or limitation of liability clauses inserted into contracts) and their legislative regulation. Whereas the regulation of such clauses is limited to the common law and UCTA 1977 in the case of commercial contracts (B2B), in the case of consumer contracts (B2C) the law intervenes to control a broader category of terms, ‘unfair contract terms’ (Consumer Rights Act 2015) with the critical test being ‘unfairness’.


Contract Law ◽  
2019 ◽  
pp. 371-403
Author(s):  
TT Arvind

This chapter examines how the law regulates contract terms, with particular emphasis on rules that are intended to protect weaker parties. It begins with a discussion of the limits of freedom of contract and proceeds by assessing the role played by formal requirements, such as the requirement that contracts be in writing. It then considers how the law regulates contract terms which seek to alter the liability that one party will have in the event of breach. More specifically, it looks at exclusion clauses in the common law and the statutory regulation of such clauses, along with liquidated damages, contractual remedies, and the rule against penalties. It also explores the extent to which consumer protection law restricts the terms that can be included in consumer contracts, especially when dealing with the problem of unfair terms.


1990 ◽  
Vol 49 (1) ◽  
pp. 80-90 ◽  
Author(s):  
C.J.W. Allen

Among rules of law Karl Llewellyn noted at one extreme the “rule-of-thumb, in which the flat result is articulated, leaving behind and unexpressed all indication of its reason”. At the other extreme was “the way of principle, in which the reason is clearly and effectively articulated, and that articulation is made part of the very rule”. The vice of principle, he observed, “can be a vaporish vagueness, and the techniques of its effective formulation are not easy to isolate for communication and use”. Partly for this reason, partly perhaps because of its origin in a last-minute political compromise, section 78(1) of the Police and Criminal Evidence Act 1984 at first confounded attempts to predict the manner of its application. One commentary suggested that it was “of no practical use”; there were dicta in the Court of Appeal to the effect that it did “no more than to re-state the power which judges had at common law before the Act of 1984 was passed”. A leading work on the law of evidence expressed the view that the sub-section was “cast in terms of such vagueness and generality as to furnish little guidance to the court”. There has been some development since those early days. It now seems clear that the Police and Criminal Evidence Act 1984 is to be regarded as a codifying Act which has to be looked at on its own wording. Section 78(1), therefore, does not merely re-state the position at common law. It is also clear that in its operation it overlaps section 76 and, through section 82(3), some of the common law. Section 78(1) may be applied in a variety of situations, with or without the presence of some element of impropriety in the way in which the evidence was obtained. Basic questions about its operation nevertheless remain.


2010 ◽  
Vol 74 (2) ◽  
pp. 163-179 ◽  
Author(s):  
Catherine Elliott

By removing the common law rules on a duty to act from liability for manslaughter by omission, the law would more accurately reflect the intention of the House of Lords in R v Adomako (1995). The current duplicitous requirement of both a duty to act and a duty of care appears to be confusing both the trial judge and the jury. The causing of a harm by an omission does not automatically mean the conduct was less morally reprehensible than where harm is caused by an act and this reform would therefore potentially bring the law more closely into line with society's moral values. The law would be rendered clearer and simpler and injustices would be avoided due to the other requirements of the Law Commission's proposed offence of killing by gross carelessness, including causation and gross carelessness. Through this reform justice could at last be offered should a stranger choose to walk by a drowning baby.


Author(s):  
Hein Kötz

This chapter examines how the law deals with contracts that a party entered into by mistake. After a brief discussion of the historical background of the rules in the civil law and the common law, the question is raised whether there is a relevant mistake if a party’s ‘motive’ for entering into the contract turns out to be incorrect, if the party’s mistake refers to the value of what it promised or was to receive under the contract, or if the party’s mistake is due to its carelessness. Should the relevance of a mistake not depend on whether it was caused or shared by the other party? Finally, the chapter outlines some common threads in the development of a European law on mistake.


Brownsword, R and Howells, G, ‘The implementation of the EC Directive on Unfair Terms in Consumer Contracts – some unresolved questions’ [1995] JBL 243. Brownsword, R, Howells, G and Wilhelmsson, T (eds), Welfarism in Contract, 1994, Aldershot: Dartmouth. Burrows, A, (ed), Essays on the Law of Restitution, 1991, Oxford: Clarendon. Burrows, A, The Law of Restitution, 1993, London: Butterworths. Burrows, A, Understanding the Law of Obligations, 1998, Oxford: Hart. Burrows, A, ‘Free acceptance and the law of restitution’ (1988) 104 LQR 576. Carr, C, ‘Lloyd’s Bank Ltd v Bundy’ (1975) 38 MLR 463. Cheshire, G, Fifoot, C and Furmston, M, Law of Contract, 13th edn, 1996, London: Butterworths/Tolley. Chitty (Guest, AG (ed)), Contracts: General Principles, 27th edn, 1994, London: Sweet & Maxwell. Coase, R, ‘The problem of social cost’ (1960) 3 Journal of Law and Economics 1. Collins, H, Law of Contract, 3rd edn, 1997, London: Butterworths. Collins, H, ‘Good faith in European contract law’ (1994) OJLS 229. Cooke, PJ and Oughton, DW, The Common Law of Obligations, 3rd edn, 2000, London: Butterworths. Coote, B, Exception Clauses, 1964, London: Sweet & Maxwell. Coote, B, ‘The Unfair Contract Terms Act 1977’ (1978) 41 MLR 312. De Lacey, J, ‘Selling in the course of a business under the Sale of Goods Act 1979’ (1999) 62 MLR 776. Dean, M, ‘Unfair contract terms – the European approach’ (1993) 56 MLR 581. Duffy, P, ‘Unfair terms and the draft EC Directive’ (1993) JBL 67. Evans, A, ‘The Anglo-American mailing rule’ (1966) 15 ICLQ 553. Fehlberg, B, ‘The husband, the bank, the wife and her signature – the sequel’ (1996) 59 MLR 675.

1995 ◽  
pp. 808-808

Author(s):  
TT Arvind

This chapter examines how the law regulates contract terms, with particular emphasis on rules that are intended to protect weaker parties. It begins with a discussion of the limits of freedom of contract and proceeds by assessing the role played by formal requirements, such as the requirement that contracts be in writing. It then considers how the law regulates contract terms which seek to alter the liability that one party will have in the event of breach. More specifically, it looks at exclusion clauses in the common law and the statutory regulation of such clauses, along with liquidated damages, contractual remedies, and the rule against penalties. It also explores the extent to which consumer protection law restricts the terms that can be included in consumer contracts, especially when dealing with the problem of unfair terms.


2019 ◽  
pp. 126-148
Author(s):  
Jill Poole ◽  
James Devenney ◽  
Adam Shaw-Mellors

Each Concentrate revision guide is packed with essential information, key cases, revision tips, exam Q&As, and more. Concentrates show you what to expect in a law exam, what examiners are looking for, and how to achieve extra marks. This chapter discusses the use and enforceability of exemption clauses (total exclusion or limitation of liability clauses inserted into contracts) and their legislative regulation. Whereas the regulation of such clauses is limited to the common law and UCTA 1977 in the case of commercial contracts (B2B), in the case of consumer contracts (B2C), the law intervenes to control a broader category of terms, ‘unfair contract terms’ (Consumer Rights Act 2015) with the critical test being ‘unfairness’.


Author(s):  
Janet O’Sullivan

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 imposes a test of fairness on terms in consumer contracts, apart from the core terms.


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