Contract law unfair terms it is commonplace for a party drawing up a contract to seek to minimise the amount of liability that may be incurred in the performance of that contract. Contractual clauses that have this effect are usually called `exclusion clauses' or `limitation clauses'. There is a whole academic debate about the doctrinal significance of these clauses in the law of contract.

This debate centres on whether they are `defensive' or `obligation defining' in nature. This is of little practical significance, because the courts and, more recently, the legislature have come down in favour of the `defensive' interpretation. Arguably, this `defensive' view is more prevalent in the uk than the european community ec , and this may account for some of the problems that are described in this article. Exclusion clauses often attempt to exclude or limit liability for losses arising out of breach of contract, or for extra contractual liabilities.

Apa Style Psychology Essay

Extra contractual liabilities will often include losses for misrepresentation, or negligence in performing the contract. In practice, most peoples' exposure to the sharp end of an exclusion clause is as a consumer in a sales or services transaction. For example, may of us who use public transport have experienced entering into contracts in which the service provider excludes liability for being unable to run a tolerably useful service. Generally we don't find this out until it is too late, and even if we found out there wouldn't be much we could do. Of course, from a business perspective this limitation of liability makes good sense. If the service provider has to pay compensation for all the losses that arise from running a poor service, that cost will simply be passed on to the consumer. Whatever the merits of this argument, there are clearly exclusions that perpetuate an injustice so great that they can't be tolerated in a decent society.

Phd Dissertation Semantic Web

The archetypal case of this sort is thompson v london midland and scottish railway 1930 . In this case, an elderly, illiterate woman bought a railway ticket which contained a reference to the railway company's standard terms and conditions. These included on page 552 a statement that the railway would not accept liability for negligence. When the train pulled up at the station, it turned out that it was too long for the platform, and there was a long drop from the end carriage to the ground. As a result of this mis operation, the unfortunate mrs thompson fell and broke her leg. When she sued the railway in negligence, the exclusion clause was upheld, to the amazement of almost everybody.

Mrs thompson was an adult of full capacity, despite being unable to read, and had the notional freedom to either enter the contact or refrain. Although the courts had begun to develop common law principles by which exclusion clauses could be brought under control, cases like thompson made it clear that some form of statutory control was desirable. The problem with allowing statute law to get to work on exclusion clauses is that this conflicts with a long established principle of english law. This principle is that of `freedom of contract' it says that adults of full capacity who make contracts with each other should expect to abide by them, including those terms that are unwelcome.

So when the unfair contract terms act 1977 `ucta' was drafted, it tried to balance freedom of contract against the need to prevent egregious injustice. As a result, ucta deals with a limited set of highly specialised types of exclusion table 1. For example, it strikes out any attempt disclaim liability for death or injury, and this would probably have allowed mrs thompson to win her case against the lms railway. Attempts to disclaim liability for losses caused by negligence will be struck out if they don't pass the test of `reasonableness' of which, more later.

Utca also restricts the ability to exclude liability for selling poor quality, defective goods, or goods that the seller doesn't have a right to sell because, for example, they actually belong to someone else at the time. Finally, it makes attempts to exclude liability for misrepresentation subject to a test of reasonableness. Many of these types of exclusion are treated differently depending on whether the party affected is a business or is `dealing as consumer'. As a result and as should be clear from table 1 the provisions of ucta are complex, and a number of key terms are left undefined. For example, the definition of `consumer' leaves a lot to the interpretation of the courts. Notoriously, in the case of r and b customs brokers v udt the court of appeal held that a family firm that bought a car, partly for work and partly for social use, was a consumer for the purposes of ucta.

To be fair, it isn't necessarily obvious what a consumer is, in a number of borderline situations. Ucta does not define what it means to be reasonable, but it does give some guidance. The courts are to have regard for, among other things, the relative bargaining positions of the parties, whether the contract is negotiated or in standard form, and whether the party affected by the exclusion clause was offered an incentive to contract on particular terms. This approach allows the courts a lot of flexibility, and some surprisingly draconian exclusion clauses have been upheld. For example, in sam business systems v hedley and co a software supplier was allowed to rely on an exclusion clause that allowed it to supply a thoroughly inadequate product.

The technology and construction court decided that the parties were of roughly equal bargaining power, and the purchasers could have attempted to negotiate better terms. The court also recognised that such clauses are ubiquitous in the computing industry. Had the purchaser been a consumer, the reasonableness test would not have applied the exclusion clause would simply have been struck out, because it attempted to disclaim liability for supplying goods that are not suitable for their purpose.

The other problem with ucta, which results from the delicate balancing act it has to perform, is that it only deals with exclusion clauses, and these are only one type of onerous contractual clause that causes problems. Here an advertising agency asked a photographic service to produce photographs for a presentation. The photographic service sent 47 transparencies to the agency for inspection, along with a contractual letter which had in its small print the statement that transparencies were to be returned within 14 days. The agency forgot about the transparencies for a couple of weeks, and were rather surprised to receive a bill for вј3,783.

The court of appeal held that a term as onerous as this would have to be made very clear if it were to be enforced, and the claimants had not done anything to bring it to the defendant's attention. This process of striking out a clause on the grounds of incomplete `incorporation' was one of the ways that the courts had sought to control exclusion clauses in the pre ucta days. While the interfoto case showed that the courts were prepared to go through the whole process again for other types of onerous clause, this was hardly satisfactory.