Unfair Terms in the Contracts and Exclusion of Liabilities - Essay Example

This may be due to the lack of a precise definition of the term ‘reasonableness’ under the provisions of the Act, the lack of which  that gave enormous freedom to the courts to decide on the reasonableness depending on the particular circumstances of the individual cases. Moreover the courts distinguished between the business transactions and the goods or services supplied to the consumers to decide on the reasonableness of the cases which enhanced the complexity of the issues arising from the operations of the Act.

But it is certain that the Unfair Contract Terms Act 1977 considers the invalidation of the limitations and exclusions of the liabilities arising out of the operation of the standard written terms of business in case they are found to be unfair or unreasonable. This would leave the contractors facing an unlimited liability with respect to any issues arising during the course of construction process with the developers or the employers as the case may be. The Court of Appeal has recognized the reasonableness of the claim for exclusion of the liability of an IT supplier in the case of Watford Electronics v Sanderson.

In this case Lord Justice Chadwick observed that “where experienced businessmen representing substantial companies of equal bargaining power negotiate an agreement, they should be taken to be the best judges of the commercial fairness of that agreement. The court should in these circumstances be slow to intervene to substitute its own judgment.”  Thus the decision of the Court of Appeal had acted.