Unfair Contract Terms Act 1977

In looking to appreciate the significance of the Unfair Contract Terms Act (‘UCTA’) 1977, it must be recognised that, whilst, generally, the law of contract has created a range of ways for the individual terms of a contract to be avoided or ‘blunted’, the remit of UCTA 1977 is actually almost entirely focussed upon contractual provisions and notices that look to effectively limit or exclude liability, or its equivalent. As a result, whilst some of UCTA 1977’s controls apply universally and strike down particular terms unconditionally, other controls actually allow a ‘term’ to be effectively justified as ‘reasonable’, so a large business can still impose onerous terms, because there is no statutory protection provided for.

This is supported by the fact courts in this country have also looked to apply principles to make contracts work, according to the principle established in G Percy Trentham Ltd v. Archital Luxfer Ltd [1993] 1 Lloyd’s Rep 25 at p.27 that “the transaction … performed on both sides will also make it unrealistic to argue that there was no intention to enter into legal relations ... Specifically, the fact that the transaction is executed makes it easier to imply a term resolving any uncertainty, or alternatively, it may make it possible to treat a matter as not finalised in negotiations as inessential”. Therefore, with this in mind, each and every case that comes before the court in this country must be decided solely on the specifics of its facts and the construction of its agreement.

As a result, some surprisingly draconian exclusion clauses have been upheld, supported by SAM Business Systems v. Hedley & Co [2002] EWHC 2733, despite the fact English case law developed no general principle allowing terms apparently agreed by parties to a contract to be attacked solely on grounds of unfairness, illustrated by Mitsubishi Corp v. Eastwind Transport Ltd [2004] EWHC 2924. This is because, according to the Law Commission’s ‘Second Report on Exemption Clauses’ ((1975) (Law Com No. 69)), a contract term “bears its natural meaning of any term in any contract (and is not limited to terms in a contract between the instant parties)”. But it is also to be appreciated that a contract term or notice may amount to a contractual exclusion clause which is apt to exclude or restrict liability for breach of either a contractual or tortious duty of care, supported by Johnstone v. Bloomsbury Health Authority [1992] QB 333, or a disclaimer notice apt only to exclude or restrict tort liability, dependent on the nature of the contract.

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