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Transcript of Legal Research Project - Contract
Student Number: 11004193 Module: Legal Research Project
1
How has the courts' approach to construing exemption clauses changed since
implementation of the Unfair Contract Terms Act 1977?
Introduction:
In the 20th Century, contracts needed regulation to achieve fairness and simplicity, this was
acknowledged more directly and, Parliament intervened to include a statutory layer of
controls on top of the common law rules.1 Protection arises from the common law, the Unfair
Contract Terms Act2 and the Unfair Terms in Consumer Contract Regulations 1999. 3 It is
established that if a contractual document is signed, then in the absence of misrepresentation,
fraud, or a plea of non est factum,4 the signor will be bound by its terms, irrelevant to whether
the party has read them, or holds any knowledge of them. 5 The most common type of unfair
terms imposing a contractual document are exemption clauses, where one party will seek to
exempt liability arising from a breach of term under the contract. 6 In A notice of exemption
can be given in three ways: Notice by display, 7 notice in a document;89 notice by a course of
dealing.10 If one of these is not adhered to, the clause will be struck down in the courts.
Furthermore, Exemption clauses often provide a point at which various tensions in the law
meet: between freedom of contract and control of unfairness, between form and substance,
and between certainty and basic principle.11 These tensions will be clarified when providing
an answer on whether UCTA has been significant in the change of judge’s construing
exemption clauses.
1 Stone, The Modern Law of Contract (12th Ed, Routledge, 2013) 229 2 Unfair Contract Terms Act 1977: Henceforth referred to as UCTA 3 Unfair Terms in Consumer Contract Regulations 1999: Henceforth referred to as UTCCR’s 4 Curtis v Chemical Cleaning and Dyeing Co [1951] 1 KB 805 per Denning LJ at 808 5 L’Estrange v F Graucob Ltd [1934] 2 KB 394 per Scrutton LJ at 403. 6 Globe, Exemption Clauses and Repudiatory Breach - a "Personal" view: Nett v MARHedge [2009] 20(7) Ent.
L.R. 259-261 7 Olley v Marlborough Court [1949] 1KB 532 8 Chapelton v Barry Urban District Council [1940] 1 KB 532 9 Parker v South Easter Railway (1877) 2 CPD 416 10 Kendall v Lillico [1969] 2 AC 31 11 Macdonald, Koffman, ‘The Law of Contract’ (1st ed, OUP, 2011) 201
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Business v Consumer
UCTA places specific focus on exemption clauses applying to both business to consumer and
business to business contracts. This is significant as when judges construe an exemption
clause they will utilise different mechanisms according to the state of the contracting parties.
Since the implementation of UCTA, it has codified elements of the common law in a
statutory instrument making it easier for judges to construe and apply, yet weaknesses are
still present.12 Courts have construed exemption clauses with reluctance when considering a
party who is a consumer. The government plans to publish a draft bill establishing a simple
set of consumer rights that was included in the Queen’s speech’ to promote expeditious
economical growth.13 With publication of the draft Consumer Rights Bill it will consolidate a
number of existing consumer rights laws within a single legal framework. 14 The law dealing
with unfair bargaining powers between the parties has been held as anything but ‘simple’,
with growing frustrations amongst contracting parties and academics.
How Exemption Clauses were construed prior to implementation of the Unfair Contract
Terms Act 1977
Prior to enactment of UCTA, Denning was the principal player in the courts efforts to
regulate exemption clauses. Denning noted the more unreasonable a clause is, the greater
notice which must be given of it. 15 He is making reference to the ‘red hand rule’ which
applies to clauses which are unusual16 or unreasonable,17 although more recently it has been
referred to as an onerous clause. In Interfoto Picture Library Ltd exemption clauses were
thoroughly examined and held to be unusual, whilst concluding there is no rule of law that
12 Sproul, Contract Terms [1991] 10(3) I.B.F.L 37-38 13 Johnson, Unfair Contract Terms: Implementation problems [1994] 13(6) I.B.F.L 66-68 14 Consumer Rights Bill 2008 15 J Spurling Ltd v Bradshaw [1956] 1 WLR 461 at 466. 16 Thornton v Shoe Lane Parking Ltd [1971] 2 QB 163 17 Parker v South Eastern Railway Co. (1877) 2 CPD 416
Student Number: 11004193 Module: Legal Research Project
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liability for fundamental breach can never be excluded. 18 Since Photo Production, the courts
have not invariably adopted a robust attitude towards exclusion clauses even in commercial
contracts, and still hold that clear words have not been used to exclude particularly serious
breaches. 19 However, there has been a requirement for clarification in the area through
statute. UCTA and the Unfair Terms in Consumer Contract Regulations have tried to codify
and modify these issues through guidelines laid out in the legislation. 20 The existence of this
legislation has reduced the impetus for the common law to revert to devices such as the ‘red
hand rule’.21 However, there are limitations on the application of legislation; UCTA only
applies to exemption clauses and UTCCR’s only impact upon consumers inferring the broad
context of the ‘red hand rule’. There is a requirement for transparency as Common Law Rules
surrounding incorporation and construction hold fragilities which have been eradicated
through legislation.22 This has indefinitely made it easier for courts to construe exemption
clauses.
It has been mentioned the court should not be forthcoming in placing focus on the remote
possibilities or to accept arguments that a clause fails the test by reference to relatively
uncommon situations.23 It would seem potential for coverage of a sufficiently serious breach
should be significant even if it is relatively unlikely to occur, provided it was within the
parties’ reasonable contemplation when the contract was formulated. 24 Stone highlights that
courts are unwilling to intervene unless there has been serious breach. This is significant as
Common Law rules could avoid the courts’ obligation to implement a precise definition of an
exemption clause in deciding how they construe a specific clause. 25 The courts did not
18 Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd [1988] 1 All ER 348 19 The Chanda (1989) 20 Unfair Terms in Consumer Contract Regulations 1999 21 Stone, The Modern Law of Contract (10th ed, Routledge, 2013) 258. 22 MacDonald, ‘Exemption Clauses and Unfair Terms’ (2nd ed, Tottel Publishing, 2006) 22, p1. 23 Skipskredittforeningen v Emperor Navigation SA [1977] CLC 1151 24 Stone, The Modern Law of Contract (10th ed, Routledge, 2013) 257 25 J Evans & Sons (Portsmouth) Ltd v Abdrea Merzario Ltd [1976] 1 WLR 1078.
Student Number: 11004193 Module: Legal Research Project
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traditionally interpret exemption clauses on their merits, ensuring they did not infringe upon
the ‘freedom of contract’, a concept that was paramount in the 19 th Century.26 The courts
developed and fabricated formal rules surrounding ‘incorporation’, ‘construction’ and the
‘doctrine of fundamental breach’, which were used to limit the scope of exclusion clauses.27
Prior to enactment of controls imposed upon exemption clauses by UCTA, the courts
inventively used the rules of construction to mitigate the effects of such clauses. This is
acutely described by Denning MR in George Mitchell (Chesterhall) Ltd v Finney Lock Seeds
Ltd:28
‘Faced with abuse of power – by the strong against the weak – by the use of small
print conditions – the judges did what they could to put a curb upon it. They still had before
them the idol, ‘freedom of contract’. They still knelt down and worshipped it, but they
concealed under their cloaks a secret weapon.’
Denning makes reference to the ‘weapon’ as the construction of the terms in the contract.29 It
was subject to abuse, especially concerning parties with unequal bargaining power. Since the
advent of UCTA, the application of ‘strained’ construction to exemption clauses is to be
condemned. In Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd, Lord Wilberforce
stated that in clauses exempting liability:
‘One must not strive to create ambiguities by strained construction (...) the relevant words
must be given, if possible, their natural plain meaning’.30
The rules were frequently invoked to justify extremely artificial interpretations of exclusion
clauses in order to protect the other party, by deciding the clause did not cover the
26 Rubino-Sammartano, Exemption Clause in Contracts [1980] 46(4) Arb. 250-251 27 Stone, The Modern Law of Contract (12th Ed, Routledge, 2013) 230 28 [1983] QB 284 at 297 29 [1983] QB 284 at 297 30 [1983] 1 All ER 101 at 104
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contractor’s liability when upon natural meaning of the words it plainly did. 31 A clear
framework has enabled judges to construe exemption clauses with greater ease, with greater
clarity on the rules of construction.
The Unfair Contract Terms Act 1977
Although previous legislation had enabled courts to invalidate exclusion clauses in
specific situations, UCTA was the first general regime giving judges authority to
interfere with terms of a contract because they are substantively unreasonable.32
UCTA often subjects clauses to the ‘requirement of reasonableness’ and the content of the
test must be considered when drafting exemption clauses that fall within its scope. 33 Under
UCTA, the reasonableness test is set against the ‘time frame’ of when the contract was
formulated with detailed consideration provided in due course.
UCTA has controlled exclusion clauses through section 3(1), in which one party has dealt
with the other on the party’s written standard terms of business. 34 One purpose of this section
is to prevent a party from breaching a standard form contract from relying on the exemption
clause unless the clause satisfies the statutory test of reasonableness. 35 Unlike other
jurisdictions, the controls provided by the legislation have manifested difficulties surrounding
the interpretation of ‘written standard terms of business’. 36 This initiates a complexity
whereby courts struggle in interpreting whether a contract falls within the scope of Section
3(1). This was highlighted in the case of R &B Custom Brokers Co Ltd37 which was decided
under Section 6(2) of UCTA, but the court’s interpretation of Section 2 was equally
31 O’Sullivan & Hilliard, The Law of Contract (4th ed OUP 2010) 195 32 O’Sullivan & Hilliard, The Law of Contract (4th ed OUP 2010) 200 33 s.11 Unfair Contract Terms Act 1977 34 Section 3(1) Unfair Contract Terms Act 1977 35 Section 11 Unfair Contract Terms Act 1977 36 Yates, Exclusion Clauses in Contracts (2nd ed, Sweet & Maxwell, 1982) 7 37 R &B Custom Brokers Co Ltd v United Dominions Trust Ltd [1988] 1 W.L.R. 321
Student Number: 11004193 Module: Legal Research Project
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applicable to Section 3.38 The CA held defendants liable because the claimant company had
not purchased the product in the course of a business but had dealt as a consumer. This
exemplifies the disparity in which an exemption clause is construed, dependent on whether
the contracting parties are a consumer or business. However, one must consider the approach
in Stevenson v Rogers whereby the ruling in R & B was rejected with reference to Section 14
of the Sale of Goods Act.39 There is further complexity as Feldaroll Foundry Plc was ruled
using the approach in R&B.40 Once more, if one of the parties is dealing as a consumer,
Section 12(1) of UCTA would eliminate relevance to its application since all contracts in
which one of the party’s deals as a consumer are potentially controllable by Section 3, with
wider protection provided under the UTCCR’s. 41 This is a perplexity in UCTA which needs
modification in order to make it easier for courts to construe and develop their rulings to
exemption clauses.
In the relevant circumstances, UCTA will invalidate an exemption clause if it does not
‘satisfy the requirement of reasonableness’. 42 Section 11 provides the term should be a fair
and reasonable one to include, having regard to circumstance, which ought to have
reasonably been known or contemplated when contracting parties formulated the contract.43
The test is generalised, leaving a large subjective element for judicial decisions, making it
complicated for those drafting contracts to predict validity. 44 If a clause is rendered
unreasonable, the clause is rendered invalid with burden of proof on those claiming the
contract term does not satisfy the reasonableness test. 45 There has been difficulty for judges
38 Duxbury, Contract Law (2nd ed, Sweet & Maxwell, 2011) 179 39 [1988] 1 W.L.R 321. 40 [2004] EWCA Civ. 747 41 Section 12(1) Unfair Contract Terms Act 1977 42 Macdonald, Koffman ‘The Law of Contract’ (1st ed, OUP, 2011) 199 43 Section 11(1) Unfair Contract Terms Act 1977 44 Peel, Reasonable Exemption Clauses [2001] 117 L.Q.R 545-552 45 S 11(5) Unfair Contract Terms Act 1977
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in construing an exemption clause on its own merits due to the fact each case is dependent on
its own circumstances.
Construing Exemption Clauses after UCTA 1977
The judges have considered the scope provided by the test and explained the approach
concisely in George Mitchell Ltd v Finney Lock Seeds Ltd.46 On appeal their Lordships held
the clause to be sufficiently clear and unambiguous to cover the breach. Lord Bridge reverted
to guidelines on reasonableness in Section 55(5) of the Sales of Goods Act which are now
displayed in Schedule 2 of UCTA.47 Bridge stated there would be contributing factors to
every case in deciding whether an exemption clause would be construed as valid under the
reasonableness test. The case of Smith v Eric Bush elucidated upon the requirement of
reasonableness further.48 Lord Griffiths stated four questions should always be considered:
Bargaining power between the parties, the reasonable practicality of retrieving advice from
an alternative source, the difficulty of the task in which liability is being excluded and the
practical consequences. In this respect, Smith v Bush has laid down a general principle,
making it one of the most significant cases decided under UCTA. 49 There are limits to the
freedom of contractual approach in commercial cases under UCTA. 50 Judges need to be
careful not to infringe upon this freedom when construing the exemption clause for
unreasonableness. Guidelines under Smith and Schedule 2 of UCTA have provided flexibility
whilst adhering to a coherent framework for application to case specific facts. Courts need to
develop the test further to ensure any existing difficulties are eradicated.
46 [1983] A.C. 803 47 Sales of Goods Act 1979, Section 55(5) 48 [1990] 1 A.C. 831 49 St Albans City & DC v International Computers Ltd [1996] 4 All E.R 481 50 Balmoral Group Ltd v Borealis (UK) Ltd [2006] EWHC 1900 (Comm.)
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Contractual Liability & Negligence
Contractual liability is held to be ‘strict’.51 This ensures contracting parties are undertaking
obligations of the contract, whilst taking more than reasonable care. It proves the reliance on
‘strict liability’ for the party relying on the exemption clause. As a result, courts have always
been hostile in attempts to exclude liability for negligence. The courts will construe an
exemption clause invalid unless clear words are used in the terms.52 This is highlighted in
Canada Steamship Lines Ltd v The King whereby an exclusion clause in a lease, which did
not mention negligence explicitly, was held to not cover liability for resulting negligence.53
Prior to UCTA, courts preferred to be illogical whereas at present, attempts to exclude
liability for negligence to damage or loss of property must pass UCTA’s test of
reasonableness. This has placed less of an incentive for courts to scrutinise construction of
the clauses and notices to prevent parties’ from covering negligence. 54 This was highlighted
in HiH Casualty and General Insurance Ltd where it was held the Canada Steamship
instructions should not be applied mechanistically.55 This has manifested an area of flexibility
in interpreting exemption clauses for negligence. The courts’ have applied a contextual
approach which is flexible when construing the construction for all other contractual terms.56
This is a significant area of negligence which has been improved since implementation of a
statutory framework, even though it is unclear whether the Canada Steamship guidelines
remain relevant as it has not been overruled. Protection for negligence has improved through
implementation of UCTA which has aided judges with the tool to construe exemption clauses
exempting liability.
51 Mckendrick, Contract Law {10th ed, Palgrave MacMillan, 2013) 195 52 Duxbury, Contract Law (2nd ed, Sweet & Maxwell, 2011 168 53 [1952] A.C. 192 54 Williams, Lambert, ‘Exemption Clauses under scrutiny’ [1997] 3 W.L.R 1046. 55 HIH Casualty and General Insurance Ltd v Chase Manhattan Bank [2003] UKHL 6 56 Investors Compensation Scheme v West Bromwich Building Society [1998] 1 All ER 98
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Section 2 is significant and a widely applicable section. It combats liability arising from
negligence as Section 2(1) prevents exclusion or liability for negligently causing death or
personal injury. 57 This section would have been useful in disposing of the argument in
Thornton v Shoe Lane Parking Ltd that the personal injury in which Shoe Lane Parking
negligently caused was covered by an exemption clause. 58 The implementation of Section
2(1) has resulted in less need for a restrictive approach to be taken to construction of
exemption clauses.59 It is worth noting, had provisions of UCTA been in force, the CA would
have construed the exemption clause in Hollier v Rambler (AMC) Motors Ltd the same
way.60 The Law Commission’s proposals for unification of both UCTA 1977 and the 1999
Regulations would maintain level of controls provided by UCTA over exemption clauses
dealing with negligence. This element of contract law has been subject to positive reform as a
result of UCTA, eradicating any ambiguities resulting from the allowance of negligence
liability to be excluded in an exemption term.
Courts still begin with common law rules, before considering whether legislation applies.
Legislative improvement has greatly reduced significance of the common law rules, but
remains relevant as some contracts do not fall within the legislative framework. 61 The body
of case law directed at exclusion clauses is still of sufficient importance to merit separate
treatment. Despite statutory interventions common law remains very important, not least
because its rules apply to all contracts, whereas the UCTA and UTCCR apply in certain
situations.62 In West Bromwich Lord Hoffmann stated:
57 Section 2(1) UCTA 1977 58 [1971] 2 QB 163 59 Mckendrick, Contract Law {10th ed, Palgrave MacMillan, 2013) 195 60 [1972] 2 QB 71 61 O’Sullivan & Hilliard, The Law of Contract (4th ed OUP 2010) 195 62 Stone, The Modern Law of Contract (12th Ed, Routledge, 2013) 230
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‘Almost all the old intellectual baggage of ‘legal’ interpretation has been discarded’.63
Hoffman implies that courts can discard traditional common law rules when construing
exclusion clauses. Although as Phillips said wryly in The Tychy,64 ‘a little intellectual hand
luggage is no bad thing when construing a contract’. So the current status of these rules is not
entirely certain. Hoffmann may simply have been intending to identify that since UCTA,
courts no longer need this sort of artificial approach (Common Law) to construction and have
rejected it. On the contrary, it does provide reliable evidence to show UCTA has been a
useful framework when construing exemption clauses.
Terms drafted may appear to be ambiguous, although this was clarified with the changed
approach to construction post Investors Compensation Scheme v West Bromwich Building
Society.65
The Unfair Contract Terms Act 1977 has not changed the need to construe the contract. Once
it has established the exemption clause is incorporated into the contract, one would consider
the drafting and whether it covers what has occurred. This is significant as if the clause has
been inappropriately drafted, UCTA will have a negligible impact.66
It has been suggested the legislative intention behind UCTA might be used by the courts to
rationalise common law powers in dealing with an unfair term which did not fall within
particular extent of the act.67 Particularly where consumers are involved, there is a risk that
exclusion clauses will be used in a manner which exploits the inferior bargaining position of
the other party in a wholly unreasonable way. 68 Initially, the courts developed a number of
doctrines to meet these concerns; UCTA to regulate exclusion clauses in certain areas;
63 Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 W.L.R 898 64 The Tychy (No.2) [2001] EWCA Civ 1198 65 [1998] 1 All ER 98. 66 Boomsman v Clark and Rose Ltd [1983] SLT 67 67 Timeload v British Telecommunications plc [1995] EMLR 459 68 O’Sullivan & Hilliard, The Law of Contract (4th ed OUP 2010) 193
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finally, a more generalised consumer protection regime for controlling unfair terms, the
UTTCR’s 1999.
Contra Proferentem
Following Common Law, ambiguous clauses are construed ‘contra proferentem’. This
principle means the clause is construed against interests of the party seeking to rely on it;
thus, ambiguities are resolved in favour of the party who would be bound by it. 69 Before
UCTA, courts managed to find ambiguities where none would exist; therefore construe
clauses most artificially, so it would not cover the contractor’s liability. 70 This is exemplified
in Webster v Higgin, whereby a sale contract appearing to contain a thorough exemption
clause was construed as being ambiguous in the present tense. 71 The courts concluded the
clause did not comprise oral warranties prior to forming the contract. Thus after UCTA, the
CA stated the contra proferentem rule provides hazard to ‘creating’ ambiguities when none
exist.72 In Macey v Qazi it was stated the Contra Proferentem principle should only be used
as a last resort.73 It was applied by the Court of Appeal in Pratt v Aigaion to construe a clause
ambiguous in favour of the insurer in an insurance contract.74 The Rule is still used in courts,
but interpreted with caution. It is only used where there is genuine ambiguity in the wording
of a clause and not as an excuse for reading contracting terms in an artificial way. Courts are
unwilling to intervene with freedom of contract and currently favour use of statute to combat
ambiguities. In conclusion, it proves UCTA has modified the way courts construe exemption
clauses under the contra proferentem rule.
69 O’Sullivan & Hilliard, The Law of Contract (4th ed OUP 2010) 197 70 Lewison ‘The interpretation of Contracts’ [2005] 121 L.Q.R 158 71 [1948] 2 All ER 127 72 Direct Travel v McGeown [2003] EWCA Civ 1606 73 [1987] CLY 435 74 Pratt v Aigaion Insurance Company [2008] EWCA Civ 1314
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Proposals for Reform
There has been overlap between UCTA and the 1999 Regulations, creating confusion when
construing an exemption clause. There is significant nebulousness between controls over
exclusion clauses contained in UCTA 1977 and UTCCR 1999. In addition, UCTA is a
complex statute75, making it difficult to comprehend; particularly for the non- lawyer reader,
segments of UTCCR 1999 are expressed in Alien language.76
In 2002, the Law Commission issued a Consultation Paper which proposed simplification and
unification of both pieces of law into one piece of legislation. In their Unfair Terms in
Contracts report, their views differed slightly with consumers receiving wider protection. The
bill achieves this from covering not just exclusion clauses but all terms. At present
businesses do not apply to the 1999 Regulations, yet can claim provision from UCTA with
regard to exempting liability. Courts have held exemption clauses unreasonable with
reluctance, as it potentially unsettles commercial transactions. The draft bill recognises a
‘business’ can vary greatly, inferring the necessity to procure protection to small businesses,
with weak bargaining power. Once more, the draft bill will retain provisions of UCTA but
would catch exemption clauses that have not been individually negotiated, which are
contained in standard form. This is significant as it eradicates complexities surrounding the
current parallel legislative regime. It would demonstrate equity in protection of consumers
and vulnerable small businesses, whilst restricting protection provided under existing
provisions for large businesses. Since the Molony report (Final Report of the Committee on
Consumer Protection) most of the legislative effort in the field of commercial law has been
directed towards consumer protection.77 In such difficult circumstances the consumer will
frequently find it beyond his power to make an informed choice, or may hold little bargaining
75 Unfair Terms in Contracts, Law Com No 292, Scot Law Com No 199, Cm 6464, 2005, para 1.14 76 Unfair Terms in Contracts, Law Com No 292, Scot Law Com No 199, Cm 6464, 2005, para 1.15 77 Diamond, Molony Commitee Final Report of the Commitee on Consumer Protection [1963] 1 M.L.R 26, 66
Student Number: 11004193 Module: Legal Research Project
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power with no choice at all. This infers Consumers are vulnerable to exploitation and
deception, both in relation to exemption of liability of the goods or services received and in
relation to legal arrangements under which they are supplied.78
At present it is unknown as to whether the bill will be implemented. The government should
have acted sooner to eradicate current intricacies surrounding particular areas of law
controlling exemption clauses. The UK government has to respond to the European’s
Commissions proposals of harmonising the Consumer Rights Directive. 79 This aimed to
extend four existing consumer Directives relating to unfair terms and exemption clauses in
consumer contracts. The UK has chosen to implement limited parts of the Directive through
the Consumer Rights (Payments Surcharges) Regulations 2012 80and other aspects intended
to be concluded in the Consumer Bill of Rights and Consumer Protection from Unfair
Trading (Amendments) Regulations. 81 However, although there has been an attempt to
eliminate complications, the omission of synthesis is making it harder for judges to construe
reasonable exemption clauses for the purpose of excluding liability. In 2012, a further
consultation paper focussing specifically on consumer contracts was issued. 82 The Law
Commission still believed its recommendations in the 2005 report were correct. 83 As yet,
however, there is no indication of when any significant reform of the legislation will occur. It
remains to be seen whether the government will consult the Law Commission further to
provide guidance on improving efficiency in unifying existing legislation, a result that would
benefit the judges’ attempts to construe exemption clauses.
78 Macdonald, Exemption Clauses and Unfair Terms [2000] 11(6) I.C.C.L.R. 233-234 79 Consumer Rights Directive 2011/83/EU 80 The Consumer Rights (Payment Surcharges) Regulations 2012 81 The Consumer Protection from Unfair Trading Regulations 2008
82 Unfair Terms in Consumer Contracts: A new approach? Issues Paper, Law Commission and Scottish Law
Commission, July 2012. 83 Stone, The Modern Law of Contract (12th Ed, Routledge, 2013) 269
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Conclusion
Many developed countries have sought to combat complexities arising from inequality of
bargaining power and exemption clauses by legislation. 84 Acts appear more comprehensive
but UCTA is indefinitely the most significant statute in English Contract Law since the
implementation of the Statute of Frauds. The act is subject to scrutiny as it makes a negative
contribution to eradicating complexities by not rendering the previous law redundant, for
example, the Canada Steamship guidelines. This requires the courts to recognise the whole of
the common law prior to consideration of the statute, whilst the act itself is not internally
simple. Its scope cannot be concisely stated as sections between UTCCR’s and UCTA
overlap confusingly. The role of the common law, especially the rules of construction are
likely to diminish in the future, although the Contra Proferentem rule is likely to apply to
cases of genuine ambiguity.
In summary, UCTA has been a significant tool in the method of construing exemption
clauses. Although complexities remain, especially concerning business to consumer
contracts, it has clarified confusing areas of Common Law. Having a codified statutory
control ensures decision making can deliver clarity; at greater ease. The Common Law
provides an insight into the subjective nature of the reasonableness test, proving it still holds
usefulness for when the judges’ are interpreting exemption clauses in a contract. The research
project has clarified previous presumptions that UCTA has aided in construing exemption
clauses. One would have to consider the influx of European intervention with Contract Law
and how this will potentially affect future legislation surrounding exemption clauses. For
now, UCTA will serve as the lead tool for judges in the courts when construing exemption
clauses.
84 Isreali Standard Contracts Law 1964
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Bibliography:
Statute:
Consumer Rights Bill 2008
Consumer Rights (Payment Surcharges) Regulations 2012
Isreali Standard Contracts Law 1964
Sales of Goods Act 1979
Unfair Contract Terms Act 1977
Unfair Terms in Consumer Contract Regulations 1999
E.U Directive:
Consumer Rights Directive 2011/83/EU
Case Law:
Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd
Balmoral Group Ltd v Borealis (UK) Ltd [2006] EWHC 1900 (Comm.)
Boomsman v Clark and Rose Ltd [1983] SLT 67
Canada Steamship Lines Ltd v The King [1952] A.C. 192
Chapelton v Barry Urban District Council [1940] 1 KB 532
Curtis v Chemical Cleaning and Dyeing Co [1951] 1 KB 805 per Denning LJ at 808
Direct Travel v McGeown [2003] EWCA Civ 1606
Feldaroll Foundry Plc [2004] EWCA Civ. 747
George Mitchell (Chesterhall) Ltd v Finney Lock Seeds Ltd [1983] QB 284 at 28
HIH Casualty and General Insurance Ltd v Chase Manhattan Bank [2003] UKHL 6
Hollier v Rambler (AMC) Motors Ltd [1972] 2 QB 71
Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd [1988] 1 All ER 348
Investors Compensation Scheme v West Bromwich Building Society [1998] 1 All ER
98
J Evans & Sons (Portsmouth) Ltd v Abdrea Merzario Ltd [1976] 1 WLR 1078.
J Spurling Ltd v Bradshaw [1956] 1 WLR 461 at 466.
Kendall v Lillico [1969] 2 AC 31
L’Estrange v F Graucob Ltd [1934] 2 KB 394 per Scrutton LJ at 403.
Macey v Qazi [1987] CLY 435
Olley v Marlborough Court [1949] 1KB 532
Parker v South Easter Railway (1877) 2 CPD 416
Pratt v Aigaion Insurance Company [2008] EWCA Civ 1314
R &B Custom Brokers Co Ltd [1988] 1 W.L.R. 321
Skipskredittforeningen v Emperor Navigation SA [1977] CLC 1151
Smith v Eric Bush [1990] 1 A.C. 831
St Albans City & DC v International Computers Ltd [1996] 4 All E.R 481
Stevenson v Rogers [1988] 1 W.L.R 321.
The Tychy (No.2) [2001] EWCA Civ 1198
Thornton v Shoe Lane Parking Ltd [1971] 2 QB 163
Student Number: 11004193 Module: Legal Research Project
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Timeload v British Telecommunications plc [1995] EMLR 459
Watford Electronics Ltd v Sanderson CFL Ltd [2001] 1 All Er (Comm) 696
Webster v Higgin [1948] 2 All ER 127
Other:
Diamond, Molony Commitee Final Report of the Commitee on Consumer Protection [1963] 1 M.L.R 26, 66
Unfair Terms in Consumer Contracts: A new approach? Issues Paper, Law Commission and Scottish Law Commission, July 2012.
Textbooks:
Duxbury, Contract Law (2nd ed, Sweet & Maxwell, 2011)
Macdonald, Koffman, ‘The Law of Contract’ (1st ed, OUP, 2011)
Mckendrick, Contract Law (10th ed, Palgrave MacMillan, 2013)
O’Sullivan & Hilliard, The Law of Contract (4th ed OUP 2010)
Stone, The Modern Law of Contract (12th Ed, Routledge, 2013)
Journals:
Browsword, Adams ‘The Unfair Contract Terms Act: A decade of discretion’ [1988]
104 L.Q.R 94-119
Globe, Exemption Clauses and Repudiatory Breach - a "Personal" view: Nett v
MARHedge [2009] 20(7) Ent. L.R. 259-261
Johnson, Unfair Contract Terms: Implementation problems [1994] 13(6) I.B.F.L 66-
68
Lewison ‘The interpretation of Contracts’ [2005] 121 L.Q.R 158-161
Macdonald, Exemption Clauses and Unfair Terms [2000] 11(6) I.C.C.L.R. 233-234
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