Ucta Law Essay

C. THE UNFAIR CONTRACT TERMS ACT 1977

The basic purpose of UCTA 1977 is to restrict the extent to which liability in a contract can be excluded for breach of contract and negligence, largely by reference to a reasonableness requirement, but in some cases by a specific prohibition.

S.6(2) states that as against a person dealing as consumer, liability for breach of the obligations arising from ss.13, 14 or 15 of the Sale of Goods Act 1979 (seller's implied undertakings as to conformity of goods with description or sample, or as to their quality or fitness for a particular purpose) cannot be excluded or restricted by reference to any contract term.

Exclusion clauses subject to reasonableness

S.6(3) states that as against a person dealing otherwise than as consumer liability for breach of the obligations arising from ss.13, 14 or 15 of the Sale of Goods Act 1979 can be excluded or restricted by reference to a contract term, but only in so far as the term satisfies the requirement of reasonableness.

The Act gives the greatest protection to consumers. Under s12(1)

(1) A party to a contract Ð'Ò'deals as consumerÐ'Ò' 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.

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

Peter Symmons & Co v Cook [1981] 131 NLJ 758

R & B Customs Brokers v United Dominions Trust Ltd [1988] 1 WLR 321.

Peter Symmons & Co v Cook (1981) 131 NLJ 758

The plaintiff firm of surveyors bought a second-hand Rolls Royce from the defendants which developed serious defects after 2,000. It was held that the firm was acting as a consumer and that to buy in the course of a business 'the buying of cars must form at the very least an integral part of the buyer's business or a necessary incidental thereto'. It was emphasised that only in those circumstances could the buyer be said to be on equal footing with his seller in terms of bargaining strength.

R & B Customs Brokers v United Dominion Trusts Ltd [1988] 1 WLR 321

The plaintiff company, which was a shipping agency, bought a car for a director to be used in business and private use. It had bought cars once or twice before. The sale was arranged by the defendant finance company. The contract excluded the implied conditions about merchantable quality. The car leaked badly.

It was held by the Court of Appeal that where a transaction was only incidental to a business activity, a degree of regularity was required before a transaction could be said to be an integral part of the business carried on and so entered into in the course of that business. Since here the car was only the second or third vehicle acquired by the plaintiffs, there was not a sufficient degree of regularity capable of establishing that the contract was