The Law of Contract Assignment - Essay Example

The legal issues to be addressed are, whether the shop can rely on the exclusion clause and whether Laura has any remedy to recover the damages for the loss caused to her due to the fire in her hairdressing salon from Electro Mart. Laura has to establish that the shop owner cannot rely on the exemption clause in the standard terms of the contract. An exemption clause in a contract purports to exclude liability of one of the parties to the contract, under certain circumstances. The Statute sets out that no contract term can exclude or limit liability in any way for negligently causing death or injury1.

Furthermore, if there is other loss or damage, liability for negligence cannot be excluded or restricted if the term of notice is unreasonable. Finally, if a contract term or notice makes efforts to exclude or restrict liability for negligence, agreement to or awareness of this is not of itself to be taken as indicative of the voluntary acceptance of any risk2. Laura was misled by the shop assistant in respect of the usage of the stereo with the small capacity speakers at her salon. . n clauses may be particularly harmful in consumer contracts, where the disequilibrium between the bargaining positions of the parties may be substantial.

"3This constitutes the reason for the existence of statutory controls on exclusion clauses, like the Unfair Contract Terms Act 1977 (UCTA) and the Unfair Terms of the Consumer Contract Regulations 1999 (UTCCR). The UCTA applies to the contract for the purchase of the stereo by virtue of section 1(3) which states that the Act applies to business liability which is defined as "liability for breach of obligations or duties arising from things done or to be done in the course of a business". The contract entered by Laura is included by virtue of section 3 which covers consumer contracts and section 12 which states that a person deals as a consumer if she neither makes the contract in the course of a business nor holds herself out as doing so and the shop owner makes the contract in the course of business.

It is essential to establish that Laura is a consumer. Laura had purchased the Stereo for use at her flat and also at her Hairdressing Salon; also she does not purchase and sell Stereos. This is borne out by the case of R&B Customs Brokers Co Ltd v United Dominion Trust Ltd, in which the contract excluded liability for breach of certain statutory implied terms and the exclusion clause, was subject to section 6 of the UCTA. The Court of Appeal held that the purchase of the car was only incidental to the company's business activity, which meant that the purchase was not made in the course of business and so the plaintiff company was dealing as a consumer.

Thus the defendant could not exclude liability for the breach of implied terms4. Reasonableness in respect of contract terms is clarified in section 11, which states