The Unfair Contract Terms Act 1977 103Having decided that a person is either dealing as a consumer or dealing on the other
party’s written standard terms, the protection given by s. 3 is as follows:
(i) an exclusion clause cannot protect a party against liability for breach of contract unless
this is reasonable; and
(ii) an exclusion clause cannot protect a party who fails to perform the contract at all, or
who performs in a manner different from what was reasonably expected, unless this is
reasonable.
Sections 6 and 7 – Exclusion of statutory implied terms
Sections 6 and 7 of the Unfair Contract Terms Act 1977 deals with exclusion of liability for
breach of the terms implied by ss. 12–15 SGA 1979 and the corresponding terms implied by
the SGITA 1973 and the SGSA 1982. These implied terms were considered earlier in this
chapter.
Sections 6 and 7 UCTA 1977 provide that no term can exclude liability for breach of the
implied term as to the right to sell, contained in s. 12(1) SGA 1979. Nor can any term exclude
liability for breach of the corresponding terms contained in the SGITA 1973 or the SGSA
1982.
The terms implied by ss. 13 –15 of the Sale of Goods Act 1979 (and the corresponding
terms implied by the SGITA 1973 and the SGSA 1982) are treated differently. As regards
these terms, UCTA 1977 makes two rules.
(i) If the buyer deals as a consumer, none of the statutory implied terms can be excluded
by any contract term.
(ii) If the buyer does not deal as a consumer, the statutory implied terms can be excluded,
but only to the extent that the term which does exclude them satisfies the UCTA 1977’s
requirement of reasonableness.
One further point should be noted. A person who buys at an auction or by tender is never
to be regarded as dealing as a consumer.
Section 8 – Excluding liability for misrepresentations
Section 8 UCTA 1977 provides that no term can restrict liability for misrepresentation,
unless the term satisfies the requirement of reasonableness.
The effect of UCTA 1977 is undoubtedly rather complex. Figure 3.11 might make it more
easily understood.
The meaning of reasonableness
Most of the sections of the UCTA 1977 which we have considered do allow an exclusion
clause to be effective if the clause satisfies the Act’s requirement of reasonableness.
Section 11 says that the requirement is satisfied if:
the term shall have been a fair and reasonable one to be included having regard to the circumstances
which were, or ought reasonably to have been, known to or in the contemplation of the parties
when the contract was made.
Schedule 2 to the Act says that regard must be had to the following, in deciding whether or
not a term was reasonable:
(i) The relative strength of the parties’ bargaining position relative to each other, which
will include whether or not the customer could find another supplier.