Main Function UCTA 1997 - Assignment Example

Contract Law Name Course Lecture Date Question 1 Thornton v Shoe Lane Parking Ltd [1970] EWCA Civ 2 is a case that dealt with the operation of an exclusion clause in a contract. In the case, it was ruled that a condition made after the offer of a contract is accepted cannot be taken to be part of the contract1. The case concerned an exclusion clause that deemed to exclude Shoe Lane as the owner of a Multi story car park from any personal injury liability arising in their premises. The claimant drove into the car park and was issued with a ticket that stated that the “ticket is issued subject to the conditions issue as displayed on the premises”2. Among the conditions listed on one of the car park pillars was one that said that the premises was not responsible for any damage, loss, mis-delivery or injury that is caused to customers inside the premise. Unfortunately, the claimant had an accident at the premises three hours after parking. Partly due to Shoe Lane’s negligence, the claimant was seriously injured while arranging goods in the back of his car. The judgement of the case decided that Shoe lane was partially responsible for the claimant’s injuries as the exclusion clause would not apply3. In the judgment, Lord Denning argued that the Shoe Lane Car Park should have given the claimant advance notice of the exclusion clause before issuing the ticket4. He also pointed out that the ticket carrying the condition was issued after the contract had been concluded. Lord Denning criticized Shoe Lane for attempting to escape liability for injuries caused to a customer arising from the car park’s negligence. Lord Denning referred to Parker v South Eastern Railway Co (1877) 2 CPD 416 and McCutcheon v David MacBrayne Ltd [1964] 1 WLR 125 which had ruled that a ticket consisted an offer to the customer5. He thus argued that the customer accepted the contract once he took the ticket away without objecting to its conditions6. Lord Denning argued the scenario was different where tickets are given by ticketing machines; acceptance takes place when the customer places money into the slot. A customer cannot reject a ticket issued by an automatic ticketing machine once it is thrust out to him. Lord Denning therefore asserted that the customer is only bound to conditions brought to his attention before he puts his money into the slot. Thus, he argued that the claimant was only bound to the pricing terms and “owner’s risk” conditions that were displayed at the Car Park entrance7. He noted the condition “at owner’s risk” was concerned with damage to the car. Lord Denning noted that the claimant was issued with a ticket automatically. The acceptance took place once the movement of his car caused the ticket machine to give him a ticket8. Consequently, any condition printed on the face of the ticket could not affect the contract as it had been already been concluded by the time the ticket was issued. In the case of human clerks, Lord Denning noted that Clerks should have brought the customers attention to the exemption clause9. However, the Shoe Lane Car Park did not take reasonably sufficient action to inform the claimant of the exemption clause. Question 2 (A) a) Long Title “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”10. b) Date of Royal Assent The Unfair Contract Terms Act 1977 received royal assent on 26 October 197711. The Act did not come in force after receiving royals assent. Instead enforcement of the new contract act was set to begin in 1978. c) Date of Commencement The Unfair Contract Terms 1977 came into force on 1st February 197812. S. 31 notes that the Act does not apply to contracts that had been in existence prior to the Act coming into force. d) Headings of sections 2 and 5? The heading for section 2 is ‘Negligence liability’13. The heading for section 5 is ‘“Guarantee” of consumer goods’14. Question 2 (B) i. Main Function UCTA 1997 The main function of the Unfair Contract Terms Act 1977 is to ensure that contract clauses that disclaim liability are not used in contracts15. The Act seeks to ensure that people who offer contracts for acceptance do not place undue responsibility on other contractual parties or enable them to escape full performance of the contract. The Act aims to make exclusion clauses included in contracts ineffective16. Operation of exclusion clauses had been a problem for common law before the enactment of the Unfair Contract Terms Act 197717. An exclusion clause is defined as a contract term that seeks to limit or exclude one party’s liability for negligence or breach of contract. Traditionally, businesses have relied on exclusion clauses at the detriment of consumers18. Common law has tried to control the application of exclusion clauses to contract law. However, businesses kept coming up with ingenious ways to use exclusion clauses into contracts. The Unfair Contract Terms Act 1977 was thus legislated with the aim of setting forth exclusion clauses that would be automatically invalid. ii. How the UCTA achieves it objective The Unfair Contract Terms Act 1977 achieves its aim by rendering some terms of contract ineffective19. For example, s2(1) asserts that liability for negligence cannot be exempted in case it causes death or personal injury. S5(1) also rules out exclusion of manufacturer’s guarantees related to good ordinarily supplied for consumption or private use20. The Act asserts that the manufacturer remains responsible for defects or negligence of his distributors The Act also addresses cases where one person is dealing as a consumer and the other a business. Under the Act, businesses cannot be excluded from liability arising from breach of obligations implied by The Unfair Contract Terms Act 1977 The Unfair Contract Terms Act 1977 also subjects exclusion clauses to the reasonableness test. Exclusion clauses can only be effective if they are shown to be reasonable in the context of the contract. S2 (2) subject exclusion for liability arising from negligence causing other types of harm rather that personal injury or death to the reasonableness test. iii. Exclusion clauses invalidated by sections 2(1) and 5(1) of UCTA 1977? Section s2(1) renders ineffective exclusion clauses that deem to disclaim liability for negligence resulting to death or personal injury to the consumer. This section is important in many situations where people offering good or services do not take reasonable care to ensure the products are safe. For example, a business that sells houses to consumers cannot escape liability if one of the houses collapses and causes harm to its inhabitants. Similarly, organization like the Car park in Thornton v Shoe Lane Parking Ltd [1970] EWCA Civ 2 cannot escape liability for injury resulting from negligence within their premises21. On the other hand s5(1), asserts that manufacturers cannot rely on exclusion terms to escape liability for defects in goods that become apparent when the consumer is using the goods22. The manufacturer can only rely on such exclusion clause if the defects are not caused by a person involved in the manufacture or the distribution of the goods. Section 5(1) offers valuable protection to consumers who are dealing with businesses. Manufactures have to actually offer the guarantees they purport to offer customers23. Under section 5(1) any clause seeking to limit a businesses’ stated commitment to fully or partially replace, repair or compensate for defective products are invalid. However, section 5 cannot compel businesses that have not made a firm assurance or promise of the absence of defect in, to actually live-up to that obligation24. For example a reference to manufacturer’s high standards cannot be taken to be a guarantee of quality. Question 3 In J Spurling Ltd v Bradshaw [1956] EWCA Civ 3, Lord Denning made one of his most valuable contributions to contract law25. He argued that unreasonable clauses in contracts should be indicated in red ink to draw the attention of the person accepting the contract. He stated “Some clauses which I have seen would need to be printed in red ink on the face of the document with a red hand pointing to it before the notice could be held to be sufficient”26. While the Red Hand rule has been followed in deciding the applicability of exclusion clauses it applicability has not been as wide after the legislation of the UCTA 1977. The red hand rule had been retained as it relates to the fundamental principle of contract law that states that a party can only rely on contracts terms that were incorporated into the contract prior to its conclusion27. The Red Hand rule requires customers to be informed of exclusion clauses that may take some of their rights away. Courts maintain that offering parties must bring to the customer’s attention any unreasonable exclusion clauses. However, L’Estrange v Graucob [1934] 2 KB 394 ruled it was only necessary to incorporate exclusion terms in the contract to make them ineffective28. The case also ruled that attention need not be drawn to the clauses for them to be effective. Currently, the exclusion clauses that were the concern of the Red Hand rules have been covered by the Unfair Contract Terms Act 1977. Unfortunately, the Unfair Contract Terms Act 1977 does not cover all unfair contracts term meaning courts may still find an opportunity to apply the Red hand rules. The grounds for invalidating exclusion clauses covered by the Unfair Contract Terms Act 1977 cover the clauses Lord Denning thought should be printed in red ink to attract the consumer’s attention29. The Act invalidates exclusion and limitation clauses that affect liability arising from negligence or breach of contract by either parties. Secondly, it prevents reliance on a second contract to limit or exclude liability arising in the main contract. In effect, the Unfair Contract Terms Act 1977 provides protection to consumers formerly provided by the red hand rule prior to the enactment of the act. Bibliography C. Turner: Contract Law Key Cases, 2nd edn. (2011, Hodder Education) R Taylor, and Taylor: Contract Law Directions, 4th edn (Oxford University Press, 2013) Thornton v Shoe Lane Parking Ltd [1970] EWCA Civ 2 Unfair Contract Terms Act 1977 Read More