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Home > Law > Law glossary > Law glossary
Unfair Contract Terms Act (1977)
Last modified: Thu Feb 23 16:37:38 2006
This Act limits the applicability of an ExclusionClause
in a contract; specifically it applies to:
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clauses that attempt to limit liability for negligence, and
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clauses that attempt to limit liability in breach of contract
It is a complication that the Act applies only to exclusion clauses of
the type described above; it does not apply to clauses that define the
duties of the contracting parties. There is, therefore, some scope
to define exclusion clauses as duty-defining clauses and escape the
legislation. Courts have, on the whole, acted in accordance with the
spirit of the Regulations, and disallowed such technical manoeuvring.
The main provisions are as follows.
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Any clause that attempts to restrict negligence liability for personal
injury or death is void
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Any clause that attempts to restrict negligence liability for loss or
damage void unless shown to be `reasonable' (see below).
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Any clause that limits liability for breach of contract, where the
contract refers to standard terms or conditions, or one of the parties
is a consumer, will be void unless `reasonable'
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Any clause that requires a consumer to indemnify any other party
(whether a party to the contract or not) for negligence of breach
of contract will be void unless `reasonable'.
Naturally the Regulations do not attempt a strict definition of `reasonable',
but they do have this to say on the subject:
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reasonableness will be assessed with reference to what the parties could
be expected to know when the contract was formed, and
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the reasonableness criterion will act in favour of a party with relatively
weak bargaining power, and
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a clause is more likely to be assessed as reasonable if the party
affected could have acted to protect himself, e.g., by insurance,
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the burden of the proof of reasonable lies with the propounder
of the clause; it is not for the person affected to prove unreasonableness.
The `reasonableness' test introduced by this statute is also
incorporated into disclaimers of liability for
Misrepresentation by s2(1) of the
MisrepresentationAct1967.
See:
ExclusionClause,
PhillipsProductsVHyland1987,
ProductLiability
ContractLaw
LegislativeInstruments
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