Unfair Contract Terms Act 1977

JurisdictionUK Non-devolved
Citation1977 c. 50


Unfair Contract TermsAct 1977

1977 CHAPTER 50

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, or 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]

B e it enacted by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—

I Amendment of Law for England and Wales and Northern Ireland

Part I

Amendment of Law for England and Wales and NorthernIreland

Introductory

Introductory

S-1 Scope of Part I.

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 Occupiers' Liability Act 1957 or the Occupiers' Liability Act (Northern Ire1and) 1957 .

(2) This Part of this Act is subject to Part III; 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.

(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.

Avoidance of liability for negligence, breach of contract, etc.

Avoidance of liability for negligence, breach of contract, etc.

S-2 Negligence liability.

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 ease 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.

S-3 Liability arising in contract.

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 entitled—

(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.

S-4 Unreasonable indemnity clauses.

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

Liability arising from sale or supply of goods

S-5 ‘Guarantee’ of consumer 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.

S-6 Sale and hire-purchase.

6 Sale and hire-purchase.

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

( a ) section 12 of the Sale of Goods Act 1893 (seller's implied undertakings as to title, etc.);

( b ) section 8 of the 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 ) section 13, 14 or 15 of the 1893 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);

( 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.

S-7 Miscellaneous contracts under which goods pass.

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.

(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 be excluded or restricted by reference to any such term except in so far as the term...

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