#2229 - Ucta Requirements - Contract Law

Claims in Negligence

• Is there business liability?(s.1 UCTA)

  • S.1(3) Breach of obligation or duties arising

    • S.1(3)(a) from things done or to be done in the course of a person’s business

    • S.1(3)(b) or from the occupation of premises used for business purposes of the occupier

    • S.14(a): business = a profession and the activities of any government department or local or public authority

  • If NO = UCTA has no application

  • If YES = Continue to next question

• Claim in negligence (s.2 UCTA)

  • Personal Injury

    • S.2(1) Person cannot be reference to any contract term or notice given

      • Exclude or restrict his liability for personal injury or death from negligence

  • Other Loss or damage

    • S.2(2) Person cannot exclude liability for this damage

      • Unless he satisfies the reasonableness test:

        • S.11 (3)

          • should be fair and reasonable to allow reliance on notice/term

            • having regard to all the circumstances obtaining when the liability would have arisen.

    • Phillips Products Ltd v Hyland [1987] H hired out excavator to P with operator. Operator negligently damaged P’s chimney. H tried to exclude liability by clause in contract which made P responsible for all actions of Operator during hire. H argued that they had transferred liability to P

      • Slade LJ:

        • Ordinary and sensible meaning of the words in context of s.2(2)

          • Mean that transfer of liability from A to B necessarily and inevitably involves the exclusion of liability so far as A is concerned.

        • Ergo, test falls within ambit of s.2(2) and is subject to reasonableness test.

    • Thompson v T Lohan (Plant Hire) Ltd [1987] Similar fact and exclusion above, except X was killed by negligent driving of operator. C sued H (hirer) who pointed to exclusion clause transferring liability to hiree (L).

      • Fox LJ

        • UCTA 1977 s.2(1) not concerned with arrangements between businesses about who will bear liability

          • It is only concerned with preventing the victim from having liability excluded in totality.

        • No exclusion here – merely arrangement between H and L about who will take consequences of negligence.

      • Burrows: Key difference = on facts of case

        • Exclusion of liability to H in this case did not operate to transfer any liability from the tortfeasor

          • To the actual victim of the tort (as in Phillips)

            • But to a third party not injured by the tort.

        • Thus UCTA s.2 had no application.

Claims in Contract under UCTA 1977

• Is there business liability?(s.1 UCTA)

  • S.1(3) Breach of obligation or duties arising

    • S.1(3)(a) from things done or to be done in the course of a person’s business

    • S.1(3)(b) or from the occupation of premises used for business purposes of the occupier

    • S.14(a): business = a profession and the activities of any government department or local or public authority

  • If NO = UCTA has no application but UTCCR might – continue to blue

  • If YES = Continue to next question

• Are you a consumer? (UCTA s.12 and s.3)(UTCCR reg3(1))

  • IF YOU

    • S.12(1)(a) neither make the contract in the course of a business nor hold yourself out as doing so;

      • R & B Customs Brokers v UDT [1988]: C (business) bought company car for managing director of shipping company. Was defective, but D excluded all defectiveness liability.

        • Dillon LJ:

          • “Course of business” should be construed narrowly.

          • Should only apply when

            • The chattel should be an integral part of the business (here, car is not integral part of C’s shipping company)

              • With a degree of regularity with its use

                • Unless that one off activity would itself constitute a trade.

          • Therefore, matters merely incidental to the business

            • Are not “in the course of” it.

              • And C therefore falls within consumer protection for UCTA 1977.

        • Burrows:

          • Strongly arguable that companies always deal within course of business

          • Purchase of car was for purposes related to the business, if not integral part thereof.

            • Isn’t it better that a consumer is construed narrowly per UTCCR reg.3(1)?

    • AND S.12(1)(b) the other party does make the contract in the course of a business; AND

    • AND S.12(2)(a)+(b) you aren’t buying goods sold by auction or by competitive tender.

    • AND S.12(3) The party alleging you aren’t a consumer can’t prove it

      • You are a consumer for the purposes of UCTA 1977

  • IF NOT

    • Are you acting on the other’s written standard terms of business?

      • IF YES: then you may have remedies within s.3 and s.6 + 7 and s.13 of UCTA 1977 (but none with UTCCR).

      • IF NOT: Act has no application in contract

        • S.3(1) This section only applies where one party deals as a consumer

          • Or on the other’s written standard terms of business.

Where C is not acting in the course of business (and therefore is acting as a consumer) and D is: Remedies

• Unfair indemnity (UCTA 1977 s.4)

  • S.4(1) Consumer cannot by any contract term

    • be made to indemnify any person (whether contracting party of third party)

      • in respect of liability that may be incurred by the other for negligence or breach of contract,

        • except to extent contract term satisfies reasonableness test.

  • S.11(1) In relation to a contract term, the requirement of reasonableness

    • is that 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.

  • S.4(2) This section applies whether the liability in question—

    • (a) is directly that of the person to be indemnified or is incurred by him vicariously;

    • (b) is to the person dealing as consumer or to someone else.

• Disputes arising from guarantees of goods (s.5)

  • Are the goods within “consumer use”?

    • They are when

      • S.5(2)(a)

        • a person is using them, or has them in his possession for use,

          • NOT exclusively for the purposes of a business;

    • IF SO

      • Is there a guarantee given by other party?

        • s.5(2)(b)

          • Guarantee = anything in writing

            • if it contains/purports some promise or assurance that defects will be made good fully or partially in some way

      • IF SO

        • Where loss or damage—

          • S.5(1)(a) arises from the goods proving defective while in consumer use; and

          • S.3(1)(b) results from the negligence of a person concerned in the manufacture/distribution

            • liability ... cannot be excluded or restricted by reference to

              • a contract term or

              • OR a notice contained in

              • OR a reference to

                • The guarantee of the goods.

Where C is not acting within the course of business (A CONSUMER) OR C is operating under D’s standard terms of business: Remedies

• Liability in Contract (s.3)

  • S.3(2) the party (D) who is not a consumer nor operating under D’s standard terms of business cannot by reference to any contract term—

    • (a) when in breach of contract,

      • exclude or restrict any liability of his in respect of the breach;

    • OR (b) claim to be entitled—

      • (i) to render a contractual performance substantially different from that which was reasonably expected of him, or

      • (ii) to render no performance at all for some or part of his obligations

        • except in so far the contract term satisfies the reasonableness test under s.11.

• Sale and hire of goods (s.6) (this concerns implied terms)

  • If you are a consumer or are operating under X’s standard terms:

    • S.6(1) X cannot exclude or restrict liability for breach of the obligations arising from—

      • S.6(1)(a) [section 12 of the Sale of Goods Act 1979] (seller's implied undertakings as to title, etc.);

      • S.6(1)(b) section 8 of the Supply of Goods (Implied Terms) Act 1973 (the corresponding thing in relation to hire-purchase)

      • S.7(3A): applies also to miscellaneous goods.

  • ONLY If you are consumer

    • S.6(2) X cannot exclude or limit liability for breach of the obligations arising from—

      • S.6(2)(a) [ss. 13, 14 or 15 of the 1979 Act] (seller's implied undertakings as to conformity of goods with description or sample, or as to their quality or fitness for a particular purpose);

      • S.6(2)(b) ss. 9, 10 or 11 of the 1973 Act (the corresponding things in relation to hire-purchase),

  • If you aren’t a consumer but are operating under X’s standard terms

    • S.6(3) liability specified in subsection (2) can be excluded or restricted by reference to a contract term,

      • but only in so far as the term satisfies the requirement of reasonableness.

        • S.11(2): Regard given to SCH 2

          • BUT this subsection does not prevent the court from holding that term in question is not a term of the contract.

  • S.7b has the same effect where the contract is not governed by the law of sale of goods or hire purchase.

• Exemption clauses (s.13)

  • S.13(1) X is prevented from

    • (a) making the liability/enforcement subject to restrictive or onerous conditions

    • (b) excluding/restricting/prejudicing any right or remedy for liability

    • (c) excluding or restricting rules of evidence or procedure;

      • S.2, 5 – 7 are to be construed in the same light as s.13.

  • S.13(2) Arbitration agreement in writing not under s.13(1)(b+c)

• Restriction of Liability (s.11)

  • S.11(4) Whether notice or term is reasonable

    • regard shall be had in particular (but without prejudice to SCH 2 for contract terms) to—

      • (a) the resources which X could expect to be available to him for the purpose of meeting the liability should it arise; and

      • (b) how far it was open to him to cover himself by insurance.

UCTTR 1999 Requirements

• Are you a consumer?

  • UTCCR reg 3(1) If you are:

    • A natural person...

      • Acting for purposes outside your business, trade or profession.

    • Chen Wishart: and you can prove it.

    • And you are in a contract with a seller of supplier

      • Reg3(1) who...