has reviewed the whole package of legislation at the request of the Department
of Trade and Industry. Their report entitled Unfair Terms in Contracts(2005)
made a number of recommendations, including a Draft Bill, but has not yet
been implemented. It proposed, among other things, the following:
- One single Act would replace the current legislation, retaining the
essence of s. 2(1) on terms purporting to exclude liability for personal
injury or death. - Any other terms apart from ‘core’ terms, e.g. price, will be subject to a
test of reasonableness, with the burden of proof in a consumer contract
being on the party trying to rely on the clause. - A new category of contract would be created, that of Small Business
Contract, for those with nine or less employees. These would be given
some protection under the new proposals regarding non-negotiated terms.
An interesting aspect of the proposals concerning the assessment of
reasonableness is whether the clause is ‘transparent’, that is clear and
understandable.
Conclusion
A consequence of both common law and statutory restrictions on unfair
terms is that an inroad hasbeen made in the freedom to contract, but also into
the freedom to take advantage of others who are under pressure and who may
lack bargaining power. To take this to extremes would be paternalistic, of
course, but a reasonable amount of protection is surely no more than a
developed society has come to expect of the modern law of contract.
Summary
There are two types of exemption clause:
- Limitation clause: limits one party’s liability toward the other in a contract.
- Exclusion clause: avoids one party’s liability toward the other in a contract.
Incorporation
The exemption clause must:
- not come too late – Olley v Marlborough Court.
- be brought to the other party’s attention in a reasonable way – Parker v
South Eastern Railway, Thornton v Shoe Lane Parking. - be of a contractual nature – Chapelton v Barry;
- not be obscured – Sugar v LMS Railway.
- not be part of a ‘course of dealing’ – Hollier v Rambler Motors.
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