Construction
- The main purpose rule – Glynn v Margetson.
- The contra proferentem rule – Houghton v Trafalgar Insurance.
- An overriding oral statement – Mendelssohn v Normand.
- An overriding misrepresentation – Curtis v Chemical Cleaning and
Dyeing Co.
Legislation
The Unfair Contract Terms Act 1977
- Mostly applies to a consumer – section 12.
- A contract term cannot now exclude or restrict liability for death or
personal injury resulting from negligence – section 2(1). - A contract term can only exclude or restrict other liability resulting
from negligence if it is reasonable to do so – section 2(2). - When dealing on one party’s standard business terms, a contract term
cannot exclude or restrict liability for non-performance or for
performance which is substantially different from what was agreed,
unless it is reasonable to do so – section 3.
Reasonableness should be based on the position at the time of contract,
including resources available and the possibility of insurance – Stewart Gill
v Horatio Myer Ltd. For examples of reasonableness, see Green v Cade,
George Mitchell v Finney Lock Seeds, Smith v Bush and Harris v Wyre
Forest, Woodman v Photo Trade Processing.
The Unfair Terms in Consumer Contract Regulations 1999
Based on a European directive, and wider than Unfair Contract Terms Act
1977 in scope, covering unfair terms in general, not just exclusion clauses.
Includes a requirement of terms to be in plain and intelligible language.
Regulation 5(1) states that a term will be unfair and therefore not
binding if it ‘contrary to the requirement of good faith causes a significant
imbalance in the parties’ rights and obligations under the contract to the
detriment of the consumer’.
The courts should consider factors such as:
- the bargaining strength of parties,
- any inducement to contract,
- special requirements of the customer,
- whether the supplier has acted equitably.
130 Contract law