UK free legal information and UK free legal articles
 

Unfair Contract Terms Act 1977

Home Free legal articles County courts Magistrate courts Crown courts UK parliament Acts
 
 
Free legal articles
Bulk Center
County court list
Combined court list
Magistrate court list
County and Magistrate court list
Crown court list
UK legal Acts
Sources of legal information
UK Acts Categories
Agriculture
Company and partnership
Data Protection
Environment
Finance and Tax
Health and safety
Land and Property
Trade and commerce
Wills and probate
 
Unfair Contract Terms Act 1977 List of acts
 Selected UK Acts and Regulations
    Wills and probate
 
Crown Copyright Acknowledged
CONTENTS

Unfair Contract Terms Act 1977

1977 CHAPTER 50

PART I

AMENDMENT OF LAW FOR ENGLAND AND WALES AND NORTHERN IRELAND

Introductory

1. Scope of Part I

Avoidence of liability for negligence, breach of contract, etc

2. Negligence liability

3. Liability arising in contract

4. Unreasonable indemnity clauses

Liability arising from sale or supply of goods

5.“Guarantee” of consumer goods

6. Sale and hire purchase

7. Miscellaneous contracts under which goods pass

Other provisions about contracts

8. Misrepresentation

9. Effect of breach

10. Evasion by means of secondary contract

Explanatory provisions

11. The “reasonableness” test

12.“Dealing as a consumer”

13. Varieties of exemption clause

14. Interpretation of Part I

PART II

AMENDMENT OF LAW FOR SCOTLAND

15. Scope of Part II

16. Liability for breach of duty

17. Control of unreasonable exemptions in consumer or standard form contracts

18. Unreasonable indemnity clauses in consumer contracts

19.“Guarantee” of consumer goods

20. Obligations implied by law in sale and hire-purchase contracts

21. Obligations implied by law in other contracts for the supply of goods

22. Consequence of breach

23. Evasion by means of secondary contract

24. The “reasonableness” test

25. Interpretation of Part II

PART III

PROVISIONS APPLYING TO WHOLE OF UNITED KINGDOM

Miscellaneous

26. International supply contracts

27. Choice of law clauses

28. Temporary provision for sea carriage passengers

29. Saving for other relevant legislation

30.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

General

31. Commencement; amendments; repeals

32. Citation and extent

SCHEDULE 1: Scope of Sections 2 to 4 and 7

SCHEDULE 2: “Guidelines” for Application of Reasonableness Test

SCHEDULE 3: Amendments of Enactments

SCHEDULE 4: Repeals

 

An Act to impose further limits on the extent to which under the law of England and Wales and Northern Ireland civil liability for breach of contract, of for negligence or other breach of duty, can be avoided by means of contract terms and otherwise, and under the law of Scotland civil liability can be avoided by means of contract terms.

[26th October 1977]

Annotations:

Commencement Information

I1Act not in force at Royal Assent; Act wholly in force at 1.2.1978 see s. 31(1)

PART I

Annotations:

Modifications etc. (not altering text)

C1Pt. I applied (3.1.1995): by 1973 c. 13, s. 11A (as inserted (3.1.1995) by 1994 c. 35, ss. 7, 8(2)(3), Sch. 2 para. 4(6)); by 1979 c. 54, s. 61(5A) (as inserted (3.1.1995) by 1994 c. 35, ss. 7, 8(2)(3), Sch. 2 para. 5(9)(c)); by 1982 c. 29, s. 18(3) (as inserted (3.1.1995) by 1994 c. 35, ss. 7, 8(2)(3), Sch. 2 para. 6(10))

AMENDMENT OF LAW FOR ENGLAND AND WALES AND NORTHERN IRELAND

Introductory

1 Scope of Part I

(1)For the purposes of this Part of this Act, “negligence” means the breach—

(a)of any obligation, arising from the express or implied terms of a contract, to take reasonable care or exercise reasonable skill in the performance of the contract;

(b)of any common law duty to take reasonable care or exercise reasonable skill (but not any stricter duty);

(c)of the common duty of care imposed by the M1 Occupiers’ Liability Act 1957 or the M2 Occupiers’ Liability Act (Northern Ireland) 1957.

(2)This Part of this Act is subject to Part 111; and in relation to contracts, the operation of sections 2 to 4 and 7 is subject to the exceptions made by Schedule 1.

(3)In the case of both contract and tort, sections 2 to 7 apply (except where the contrary is stated in section 6(4)) only to business liability, that is liability for breach of obligations or duties arising—

(a)from things done or to be done by a person in the course of a business (whether his own business or another’s); or

(b)from the occupation of premises used for business purposes of the occupier;

and references to liability are to be read accordingly [F1but liability of an occupier of premises for breach of an obligation or duty towards a person obtaining access to the premises for recreational or educational purposes, being liability for loss or damage suffered by reason of the dangerous state of the premises, is not a business liability of the occupier unless granting that person such access for the purposes concerned falls within the business purposes of the occupier].

(4)In relation to any breach of duty or obligation, it is,immaterial for any purpose of this Part of this Act whether the breach was inadvertent or intentional, or whether liability for it arises directly or vicariously.

Annotations:

Amendments (Textual)

F1Words added by Occupiers' Liability Act 1984 (c. 3, SIF 122:2), s. 2 (E.W.) and by the Occupiers' Liability (Northern Ireland) Order 1987 S.I. 1987/1280 (N.I.15), art 4

Marginal Citations

M11957 c. 31

M21957 c. 25 (N.I.)

Avoidence of liability for negligence, breach of contract, etc

2 Negligence liability

(1)A person cannot by reference to any contract term or to a notice given to persons generally or to particular persons exclude or restrict his liability for death or personal injury resulting from negligence.

(2)In the case of other loss or damage, a person cannot so exclude or restrict his liability for negligence except in so far as the term or notice satisfies the requirement of reasonableness.

(3)Where a contract term or notice purports to exclude or restrict liability for negligence a person’s agreement to or awareness of it is not of itself to be taken as indicating his voluntary acceptance of any risk.

Annotations:

Modifications etc. (not altering text)

C1S. 2(2) excluded (11.11.1999, but subject to s. 10(3)of the amending Act, does not apply in relation to a contract referred to in s. 10(2)) by 1999 c. 31, ss. 7(2), 10(2)(3)

3 Liability arising in contract

(1)This section applies as between contracting parties where one of them deals as consumer or on the other’s written standard terms of business.

(2)As against that party, the other cannot by reference to any contract term—

(a)when himself in breach of contract, exclude or restrict any liability of his in respect of the breach; or

(b)claim to be enititled—

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

(ii) in respect of the whole or any part of his contractual obligation, to render no performance at all,

except in so far as (in any of the cases mentioned above in this subsection) the contract term satisfies the requirement of reasonableness.

Annotations:

Modifications etc. (not altering text)

C1S. 3(2)(b) extended (1.11.1998 and 1.7.1999 in relation to certain contracts and 7.8.2002 insofar as not then in force) by 1998 c. 20, s. 14(2) (with s. 12); S.I. 1998/2479, arts. 2,3; S.I. 1999/1816, art. 3(1); S.I. 2002/1673, art. 2

4 Unreasonable indemnity clauses

(1) A person dealing as consumer cannot by reference to any contract term be made to indemnify another person (whether a party to the contract or not) in respect of liability that may be incurred by the other for negligence or breach of contract, except in so far as the contract term satisfies the requirement of reasonableness.

(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.

Liability arising from sale or supply of goods

5“Guarantee” of consumer goods

(1)In the case of goods of a type ordinarily supplied for private use or consumption, where loss or damage—

(a) arises from the goods proving defective while in consumer use; and

(b) results from the negligence of a person concerned in the manufacture or distribution of the goods,

liability for the loss or damage cannot be excluded or restricted by reference to any contract term or notice contained in or operating by reference to a guarantee of the goods.

(2)For these purposes—

(a)goods are to be regarded as “in consumer use” when a person is using them, or has them in his possession for use, otherwise than exclusively for the purposes of a business; and

(b)anything in writing is a guarantee if it contains or purports to contain some promise or assurance (however worded or presented) that defects will be made good by complete or partial replacement, or by repair, monetary compensation or otherwise.

(3)This section does not apply as between the parties to a contract under or in pursuance of which possession or ownership of the goods passed.

6 Sale and hire purchase

(1) Liability for breach of the obligations arising from—

(a) [F1section 12 of the Sale of Goods Act 1979](seller’s implied undertakings as to title, etc.);

(b) section 8 of the M1 Supply of Goods (Implied Terms) Act 1973 (the corresponding thing in relation to hire-purchase),

cannot be excluded or restricted by reference to any contract term.

(2) As against a person dealing as consumer, liability for breach of the obligations arising from—

(a) [F2section 13, 14, or 15 of the 1979 Act](sellers’s implied undertakings as to conformity of goods with description or sample, or as to their quality or fitness for a particular purpose);

(b) section 9, 10 or 11 of the 1973 Act (the corresponding things in relation to hire-purchase),

cannot be excluded or restricted by reference to any contract term.

(3)As against a person dealing otherwise than as consumer, the liability specified in subsection (2) above can be excluded or restricted by reference to a contract term, but only in so far as the term satisfies the requirement of reasonableness.

(4)The liabilities referred to in this section are not only the business liabilities defined by section 1(3), but include those arising under any contract of sale of goods or hire-purchase agreement.

Annotations:

Amendments (Textual)

F1Words substituted by Sale of Goods Act 1979 (c. 54, SIF 109:1), ss. 62, 63, Sch. 2 para. 19(a)

F2Words substituted by Sale of Goods Act 1979 (c. 54, SIF 109:1), ss. 62, 63, Sch. 2 para. 19(b)

Marginal Citations

M11973 c. 13.

7 Miscellaneous contracts under which goods pass

(1)Where the possession or ownership of goods passes under or in pursuance of a contract not governed by the law of sale of goods or hire-purchase, subsections (2) to (4) below apply as regards the effect (if any) to be given to contract terms excluding or restricting liability for breach of obligation arising by implication of law from the nature of the contract.

(2)As against a person dealing as consumer, liability in respect of the goods’ correspondence with description or sample, or their quality or fitness for any particular purpose, cannot be excluded or restricted by reference to any such term.

(3)As against a person dealing otherwise than as consumer, that liability can be excluded or restricted by reference to such a term, but only in so far as the term satisfies the requirement of reasonableness.

[F1(3A)Liability for breach of the obligations arising under section 2 of the Supply of Goods and Services Act 1982 (implied terms about title etc. in certain contracts for the transfer of the property in goods) cannot be excluded or restricted by reference to any such term.]

(4)Liability in respect of—

(a) the right to transfer ownership of the goods, or give possession; or

(b) the assurance of quiet possession to a person taking goods in pursuance of the contract,.

cannot [F2(in a case to which subsection (3A) above does not apply)], be excluded or restricted by reference to any such term except in so far as the term satisfies the requirement of reasonableness.

(5)F3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Annotations:

Amendments (Textual)

F1S. 7(3A) inserted by Supply of Goods and Services Act 1982 (c. 29, SIF 109:1), ss. 17(2), 20(5)

F2Words inserted by Supply of Goods and Services Act 1982 (c. 29, SIF 109:1), ss. 17(3), 20(5)

F3S. 7(5) repealed (E.W.) (6.4.2005) by The Regulatory Reform (Trading Stamps) Order 2005 (S.I. 2005/871), art. 6, Sch.; and said subsection repealed (N.I.) (15.11.2005) by The Law Reform (Miscellaneous Provisions) (Northern Ireland) Order 2005 (S.I. 2005/1452 (N.I. 7)), art. 24, Sch. 2; S.R. 2005/494, art. 2(1)(d)

Other provisions about contracts

X18 Misrepresentation

(1)In the M1 Misrepresentation Act 1967, the following is substituted for section 3—

“3 Avoidance of provision excluding liability for misepresentation

If a contract contains a term which would exclude or restrict—

(a)any liability to which a party to a contract may be subject by reason of any misrepresentation made by him before the contract was made; or

(b)any remedy available to another party to the contract by reason of sucha misrepresentation,

that term shall be of no effect except in so far as it satisfies the requirement of reasonableness as stated in section 11(1) of the Unfair Contract Terms Act 1977; and it is for those claiming that the term satisfies that requirement to show that it does.”.

(2)The same section is substituted for section 3 of the M2 Misrepresentation Act (Northern Ireland) 1967.

Annotations:

Marginal Citations

M11967 c. 7

M21967 c. 14 (N.I.)

Editorial Information

X1The text of s. 8 is in the form in which it was originally enacted: it was not reproduced in Statutes in Force and does not reflect any amendments or repeals which may have been made prior to 1.2.1991.

9 Effect of breach

(1)Where for reliance upon it a contract term has to satisfy the requirement of reasonableness, it may be found to do so and be given effect accordingly notwithstanding that the contract has been terminated either by breach or by a party electing to treat it as repudiated.

(2)Where on a breach the contract is nevertheless affirmed by a party entitled to treat it as repudiated, this does not of itself exclude the requirement of reasonableness in relation to any contract term.

10 Evasion by means of secondary contract

A person is not bound by any contract term prejudicing or taking away rights of his which arise under, or in connection with the performance of, another contract, so far as those rights extend to the enforcement of another’s liability which this Part of this Act prevents that other from excluding or restricting.

Explanatory provisions

11 The “reasonableness” test

(1)In relation to a contract term, the requirement of reasonableness for the purposes of this Part of this Act, section 3 of the M1 Misrepresentation Act 1967 and section 3 of the M2 Misrepresentation Act (Northern Ireland) 1967 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.

(2)ln determining for the purposes of section 6 or 7 above whether a contract term satisfies the requirement of reasonableness, regard shall be had in particular to the matters specified in Schedule 2 to this Act; but this subsection does not prevent the court or arbitrator from holding, in accordance with any rule of law, that a term which purports to exclude or restrict any relevant liability is not a term of the contract.

(3)In relation to a notice (not being a notice having contractual effect), the requirement of reasonableness under this Act is that it should be fair and reasonable to allow reliance on it, having regard to all the circumstances obtaining when the liability arose or (but for the notice) would have arisen.

(4)Where by reference to a contract term or notice a person seeks to restrict liability to a specified sum of money, and the question arises (under this or any other Act) whether the term or notice satisfies the requirement of reasonableness, regard shall be had in particular (but without prejudice to subsection (2) above in the case of contract terms) to—

(a)the resources which he 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.

(5)lt is for those claiming that a contract term or notice satisfies the requirement of reasonableness to show that it does.

Annotations:

Marginal Citations

M11967 c. 7

M21967 c. 14(N.I.)

12“Dealing as a consumer”

(1)A party to a contract “deals as consumer” in relation to another party if—

(a)he neither makes the contract in the course of a business nor holds himself out as doing so; and

(b)the other party does make the contract in the course of a business; and

(c)in the case of a contract governed by the law of sale of goods or hire-purchase, or by section 7 of this Act, the goods passing under or in pursuance of the contract are of a type ordinarily supplied for private use or consumption.

[F1(1A)But if the first party mentioned in subsection (1) is an individual paragraph (c) of that subsection must be ignored.]

[F2(2)But the buyer is not in any circumstances to be regarded as dealing as consumer—

(a)if he is an individual and the goods are second hand goods sold at public auction at which individuals have the opportunity of attending the sale in person;

(b)if he is not an individual and the goods are sold by auction or by competitive tender.]

(3)Subject to this, it is for those claiming that a party does not deal as consumer to show that he does not.

Annotations:

Amendments (Textual)

F1S. 12(1A) inserted (31.3.2003) by The Sale and Supply of Goods to Consumers Regulations 2002 (S.I. 2002/3045), reg. 14(2)

F2S. 12(2) substituted (31.3.2003) by The Sale and Supply of Goods to Consumers Regulations 2002 (S.I. 2002/3045), reg. 14(3)

13 Varieties of exemption clause

(1) To the extent that this Part of this Act prevents the exclusion or restriction of any liability it also prevents—

(a) making the liability or its enforcement subject to restrictive or onerous conditions;

(b) excluding or restricting any right or remedy in respect of the liability, or subjecting a person to any prejudice in consequence of his pursuing any such right or remedy;

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

and (to that extent) sections 2 and 5 to 7 also prevent excluding or restricting liability by reference to terms and notices which exclude or restrict the relevant obligation or duty.

(2) But an agreement in writing to submit present or future differences to arbitration is not to be treated under this Part of this Act as excluding or restricting any liability.

14 Interpretation of Part I

In this Part of this Act—

“business” includes a profession and the activities of any government department or local or public authority;

“goods”has the same meaning as in [F1the Sale of Goods Act 1979];

“hire-purchase agreement” has the same meaning as in the M1 Consumer Credit Act 1974;

“negligence” has the meaning given by section 1(1);

“notice” includes an announcement, whether or not in writing, and any other communication or pretended communication; and

“personal injury” includes any disease and any impairment of physical or mental condition.

Annotations:

Amendments (Textual)

F1Words substituted by Sale of Goods Act 1979 (c. 54, SIF 109:1), ss. 62, 63, Sch. 2 para. 20

Marginal Citations

M11974 c. 39

PART II

AMENDMENT OF LAW FOR SCOTLAND

15 Scope of Part II

(1)This Part of this Act [F1. . .] is subject to Part III of this Act and does not affect the validity, of any discharge or indemnity given by a person in consideration of the receipt by him of compensation in settlement of any claim which he has.

(2)Subject to subsection (3) below, sections 16 to 18 of this Act apply to any contract only to the extent that the contract—

(a)relates to the transfer of the ownership or possession of goods from one person to another (with or without work having been done on them);

(b)constitutes a contract of service or apprenticeship;

(c)relates to services of whatever kind, including (without prejudice to the foregoing generality) carriage, deposit and pledge, care and custody, mandate, agency, loan and services relating to the use of land;

(d)relates to the liability of an occupier of land to persons entering upon or using that land;

(e)relates to a grant of any right or permission to enter upon or use land not amounting to an estate or interest in the land.

(3)Notwithstanding anything in subsection (2) above, sections 16 to 18—

(a)do not apply to any contract to the extent that the contract—

(i)is a contract of insurance (including a contract to pay annuity on human life);

(ii)relates to the formation, constitution or dissolution of any body corporate or unincorporated association or partnership;

(b)apply to—

a contract of marine salvage or towage;

a charter party of a ship or hovercraft;

a contract for the carriage of goods by ship or hovercraft; or,

a contract to which subsection (4) below relates,

only to the extent that—

(i)both parties deal or hold themselves out as dealing in the course of a business (and then only in so far as the contract purports to exclude or restrict liability for breach of duty in respect of death or personal injury); or

(ii)the contract is a consumer contract (and then only in favour of the consumer).

(4)This subsection relates to a contract in pursuance of which goods are carried by ship or hovercraft and which either—

(a)specifies ship or hovercraft as the means of carriage over part of the journey to be covered; or

(b)makes no provision as to the means of carriage and does not exclude ship or hovercraft as that means,

in so far as the contract operates for and in relation to the carriage of the goods by that means.

Annotations:

Amendments (Textual)

F1Words in s. 15(1) repealed (1.4.1991) by Law Reform (Miscellaneous Provisions) (Scotland) Act 1990 (c. 40, SIF 76:2), ss. 68(2)(6), 74(2), Sch. 9; S.I. 1991/330, art. 4, Schedule

 
See more for Unfair Contract Terms Act 1977
 
Crown Copyright Acknowledged
 
 

Web Developers
Copyright © 2017 Agreement Desk. All right reserved