CHAR_A01.PDF, page 1-18 @ Normalize ( CHAR_A01.QXD )

• A consumer – section 12 defines a consumer as follows: A party to the
  contract ‘deals as a consumer’ in relation to another party if:
  (a)he neither makes the contract in the course of business nor holds himself
  out as doing so; and
  (b) the other party does make the contract in the course of a business; and
  (c) ... the goods passing under or in pursuance of the contract are of a type
  ordinarily supplied for private use or consumption.

Most provisions also apply where one party acts on the standard terms of
the other. It is also clear that under the Unfair Contract Terms Act 1977 a
person normally in business, or even a company can, in some
circumstances, act as a consumer.

The main provisions in the Unfair Contract Terms Act 1977 have had a
dramatic effect on exemption clauses in consumer contracts. There is very
little scope for exploiting a consumer in this way now, and where
exemption clauses in these contracts are allowed, it will only be when the
court finds them reasonable. The main provisions are:

• A contract term cannot now exclude or restrict liability for death
  or personal injuryresulting from negligence – section 2(1).


• A contract term can only exclude or restrict other liabilityresulting
  from negligence if it is reasonable to do so – section 2(2).


• A further provision is that in a consumer contract, or when
  dealing on one party’s standard business terms, a contract term
  cannot exclude or restrict liability for non-performanceor for
  performance which is substantially different from what was
  agreed, unless it is reasonable to do so – section 3.

Reasonableness

The law is quite clear on exemption from liability for death or personal
injury in consumer contracts – it is not allowed. However, where an attempt

Exemption clauses 123

R and B Customs Brokers Co Ltd v United Dominions Trust Ltd (1988)

The plaintiff shipping company bought a car partly for business use and

partly for private use by the owners. They did not buy cars regularly and

this was not an integral part of their business, but peripheral to it, so they

were treated by the Court of Appeal on this occasion as consumers.

Feldarol v Hermes Leasing(2004)

A finance company bought a Lamborghini sports car for its managing

director, a sports car enthusiast. As the car was mainly for personal use

this was held to be a consumer contract.