The Unfair Contract Terms Act 1977 101this as negligence. Therefore, s. 2 UCTA 1977 will determine the extent to which liability for
breach of s. 13 SGSA 1982 can be excluded, if it can be excluded at all.
Section 3 – Liability arising in contract
Section 3 protects two classes of people who make a contract:
(i) those who ‘deal as a consumer’; and
(ii) those who deal on the other party’s written standard terms.
Before considering what protection s. 3 offers, we should be clear about exactly who is
protected.
The Act makes a very important distinction between a person who deals ‘as a consumer’
and a person who does not.
Section 12(1) UCTA defines dealing as a consumer by saying that a person deals as a
consumer if:
(a) he neither makes the contract in the course of a business nor holds himself out as doing
so; and
(b) the seller does make the contract in the course of a business.
Unfortunately, the words ‘in the course of a business’ do not have the same meaning here
as they have in s. 14 SGA 1979. When we considered s. 14, earlier in this chapter, we saw
that Stevenson vRogersheld that whenever a business sells anything it does so in the
course of a business, for the purposes of s. 14 SGA. When considering the meaning of the
words ‘in the course of a business’ in s. 12 UCTA 1977, the test set out in R & B Customs
Brokers Ltd vUnited Dominions Trust Ltd (1988)must be used. This test allows a business
to buy goods without buying them ‘in the course of a business’. It regards a buyer as acting
in the course of a business only if the contract is an integral part of the business. The case
also explains what this means. A purchase by a business will be made as an integral part of
the business in only three circumstances:
(i) If the goods the business bought are the type of goods which the business is in business
to sell. For example, if a car dealer buys a car this contract will be an integral part of the
business and so the dealer will not deal as a consumer.
(ii) If the goods are not the type of goods the business usually sells, but they were bought
with the intention of selling them at a profit. For example, if a car dealer bought a yacht,
intending to sell it at a profit.
(iii) If the goods are the type of goods which the business buys fairly regularly. For
example, if a car dealer bought petrol to be used in demonstration cars.
It does seem unfortunate that the words ‘in the course of a business’ have different
meanings, depending upon whether they are used in s. 14 SGA or s. 12 UCTA. However,
in Feldaroll Foundry plc vHermes Leasing (London) Ltd (2004)the Court of Appeal
confirmed that this was the case.
If the buyer is a company then a further requirement is added by s. 12(1)(c) UCTA. This
requirement is that the goods supplied under the contract must be of a type ordinarily
supplied for private use or consumption. In R & B Customs Brokersthis condition was
satisfied when an import and export company bought a car. If the company had bought a
JCB digging machine then it could not have dealt as a consumer because this is not a type
of goods which are ordinarily used for private use or consumption. A JCB is a type of goods
ordinarily bought for business use.