Unfair Contract Terms Act

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Unfair Contract Terms Act 8.5.14 Finally, the limits placed by the Unfair Contracts Terms Act (Cap 396, 1994 Rev Ed) (the ‘UCTA’) on the operation and efficacy of exceptions clauses must be considered. It should be noted that the UCTA generally applies only to terms that affect liability for breach of obligations that arise in the course of a business or from the occupation of business premises. It also gives protection to persons who are dealing as consumers. Under the UCTA, exception clauses are either rendered wholly ineffective, or are ineffective unless shown to satisfy the requirement of reasonableness. Terms that attempt to exclude or restrict a party’s liability for death or personal injury resulting from that party’s negligence are rendered wholly ineffective by the UCTA, while terms that seek to exclude or restrict liability for negligence resulting in loss or damage other than death or personal injury, and those that attempt to exclude or restrict contractual liability, are subject to the requirement of reasonableness. The reasonableness of the exception clause is evaluated as at the time at which the contract was made. The actual consequences of the breach are therefore, in theory at least, immaterial. Section 3 of Unfair Contract Terms Act 1977 applies between contracting parties where one of them deals as a consumer or on “the other’s written standard terms of business”. This claim raised the question of what was meant by written standard terms of business. For the section to apply, the conditions had to be standard in that they were terms which the company in question used for all, or nearly all, of its contracts of a particular type without alteration. Yuanda had not dealt on Gear’s standard terms of business for the purposes of section 3 of the Unfair Contract Terms Act 1977, because Yuanda itself had negotiated some material

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