Unfair Contract Terms Act 1977

UCTA 1977 applies to exemption clauses in contracts made in the course of business.

It states that a clause exempting liability for:

• death or personal injury due to negligence is void
• other loss due to negligence is void unless reasonable.

Where there is any standard form contract (which could be between two businesses) or any contract between a business and a consumer, any attempt by a business to exclude or restrict liability for breach depends on whether the clause is reasonable.

The burden of proving reasonableness is on the party seeking to rely on the clause. In assessing whether a term is unfair or unreasonable, the court has regard to:

• the strength of the bargaining positions of the parties
• whether the buyer received an inducement to agree to the term
• whether the buyer knew or ought to have known of the existence and extent of the term
• the ability of the party to insure against the liability.

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Tags:	Unfair Contract Terms Act 1977