Legal Research Project - Contract

Student Number: 11004193 Module: Legal Research Project

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How has the courts' approach to construing exemption clauses changed since

implementation of the Unfair Contract Terms Act 1977?

Introduction:

In the 20th Century, contracts needed regulation to achieve fairness and simplicity, this was

acknowledged more directly and, Parliament intervened to include a statutory layer of

controls on top of the common law rules.1 Protection arises from the common law, the Unfair

Contract Terms Act2 and the Unfair Terms in Consumer Contract Regulations 1999. 3 It is

established that if a contractual document is signed, then in the absence of misrepresentation,

fraud, or a plea of non est factum,4 the signor will be bound by its terms, irrelevant to whether

the party has read them, or holds any knowledge of them. 5 The most common type of unfair

terms imposing a contractual document are exemption clauses, where one party will seek to

exempt liability arising from a breach of term under the contract. 6 In A notice of exemption

can be given in three ways: Notice by display, 7 notice in a document;89 notice by a course of

dealing.10 If one of these is not adhered to, the clause will be struck down in the courts.

Furthermore, Exemption clauses often provide a point at which various tensions in the law

meet: between freedom of contract and control of unfairness, between form and substance,

and between certainty and basic principle.11 These tensions will be clarified when providing

an answer on whether UCTA has been significant in the change of judge’s construing

exemption clauses.

1 Stone, The Modern Law of Contract (12th Ed, Routledge, 2013) 229 2 Unfair Contract Terms Act 1977: Henceforth referred to as UCTA 3 Unfair Terms in Consumer Contract Regulations 1999: Henceforth referred to as UTCCR’s 4 Curtis v Chemical Cleaning and Dyeing Co [1951] 1 KB 805 per Denning LJ at 808 5 L’Estrange v F Graucob Ltd [1934] 2 KB 394 per Scrutton LJ at 403. 6 Globe, Exemption Clauses and Repudiatory Breach - a "Personal" view: Nett v MARHedge [2009] 20(7) Ent.

L.R. 259-261 7 Olley v Marlborough Court [1949] 1KB 532 8 Chapelton v Barry Urban District Council [1940] 1 KB 532 9 Parker v South Easter Railway (1877) 2 CPD 416 10 Kendall v Lillico [1969] 2 AC 31 11 Macdonald, Koffman, ‘The Law of Contract’ (1st ed, OUP, 2011) 201


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Business v Consumer

UCTA places specific focus on exemption clauses applying to both business to consumer and

business to business contracts. This is significant as when judges construe an exemption

clause they will utilise different mechanisms according to the state of the contracting parties.

Since the implementation of UCTA, it has codified elements of the common law in a

statutory instrument making it easier for judges to construe and apply, yet weaknesses are

still present.12 Courts have construed exemption clauses with reluctance when considering a

party who is a consumer. The government plans to publish a draft bill establishing a simple

set of consumer rights that was included in the Queen’s speech’ to promote expeditious

economical growth.13 With publication of the draft Consumer Rights Bill it will consolidate a

number of existing consumer rights laws within a single legal framework. 14 The law dealing

with unfair bargaining powers between the parties has been held as anything but ‘simple’,

with growing frustrations amongst contracting parties and academics.

How Exemption Clauses were construed prior to implementation of the Unfair Contract

Terms Act 1977

Prior to enactment of UCTA, Denning was the principal player in the courts efforts to

regulate exemption clauses. Denning noted the more unreasonable a clause is, the greater

notice which must be given of it. 15 He is making reference to the ‘red hand rule’ which

applies to clauses which are unusual16 or unreasonable,17 although more recently it has been

referred to as an onerous clause. In Interfoto Picture Library Ltd exemption clauses were

thoroughly examined and held to be unusual, whilst concluding there is no rule of law that

12 Sproul, Contract Terms [1991] 10(3) I.B.F.L 37-38 13 Johnson, Unfair Contract Terms: Implementation problems [1994] 13(6) I.B.F.L 66-68 14 Consumer Rights Bill 2008 15 J Spurling Ltd v Bradshaw [1956] 1 WLR 461 at 466. 16 Thornton v Shoe Lane Parking Ltd [1971] 2 QB 163 17 Parker v South Eastern Railway Co. (1877) 2 CPD 416


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liability for fundamental breach can never be excluded. 18 Since Photo Production, the courts

have not invariably adopted a robust attitude towards exclusion clauses even in commercial

contracts, and still hold that clear words have not been used to exclude particularly serious

breaches. 19 However, there has been a requirement for clarification in the area through

statute. UCTA and the Unfair Terms in Consumer Contract Regulations have tried to codify

and modify these issues through guidelines laid out in the legislation. 20 The existence of this

legislation has reduced the impetus for the common law to revert to devices such as the ‘red

hand rule’.21 However, there are limitations on the application of legislation; UCTA only

applies to exemption clauses and UTCCR’s only impact upon consumers inferring the broad

context of the ‘red hand rule’. There is a requirement for transparency as Common Law Rules

surrounding incorporation and construction hold fragilities which have been eradicated

through legislation.22 This has indefinitely made it easier for courts to construe exemption

clauses.

It has been mentioned the court should not be forthcoming in placing focus on the remote

possibilities or to accept arguments that a clause fails the test by reference to relatively

uncommon situations.23 It would seem potential for coverage of a sufficiently serious breach

should be significant even if it is relatively unlikely to occur, provided it was within the

parties’ reasonable contemplation when the contract was formulated. 24 Stone highlights that

courts are unwilling to intervene unless there has been serious breach. This is significant as

Common Law rules could avoid the courts’ obligation to implement a precise definition of an

exemption clause in deciding how they construe a specific clause. 25 The courts did not

18 Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd [1988] 1 All ER 348 19 The Chanda (1989) 20 Unfair Terms in Consumer Contract Regulations 1999 21 Stone, The Modern Law of Contract (10th ed, Routledge, 2013) 258. 22 MacDonald, ‘Exemption Clauses and Unfair Terms’ (2nd ed, Tottel Publishing, 2006) 22, p1. 23 Skipskredittforeningen v Emperor Navigation SA [1977] CLC 1151 24 Stone, The Modern Law of Contract (10th ed, Routledge, 2013) 257 25 J Evans & Sons (Portsmouth) Ltd v Abdrea Merzario Ltd [1976] 1 WLR 1078.


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traditionally interpret exemption clauses on their merits, ensuring they did not infringe upon

the ‘freedom of contract’, a concept that was paramount in the 19 th Century.26 The courts

developed and fabricated formal rules surrounding ‘incorporation’, ‘construction’ and the

‘doctrine of fundamental breach’, which were used to limit the scope of exclusion clauses.27

Prior to enactment of controls imposed upon exemption clauses by UCTA, the courts

inventively used the rules of construction to mitigate the effects of such clauses. This is

acutely described by Denning MR in George Mitchell (Chesterhall) Ltd v Finney Lock Seeds

Ltd:28

‘Faced with abuse of power – by the strong against the weak – by the use of small

print conditions – the judges did what they could to put a curb upon it. They still had before

them the idol, ‘freedom of contract’. They still knelt down and worshipped it, but they

concealed under their cloaks a secret weapon.’

Denning makes reference to the ‘weapon’ as the construction of the terms in the contract.29 It

was subject to abuse, especially concerning parties with unequal bargaining power. Since the

advent of UCTA, the application of ‘strained’ construction to exemption clauses is to be

condemned. In Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd, Lord Wilberforce

stated that in clauses exempting liability:

‘One must not strive to create ambiguities by strained construction (...) the relevant words

must be given, if possible, their natural plain meaning’.30

The rules were frequently invoked to justify extremely artificial interpretations of exclusion

clauses in order to protect the other party, by deciding the clause did not cover the

26 Rubino-Sammartano, Exemption Clause in Contracts [1980] 46(4) Arb. 250-251 27 Stone, The Modern Law of Contract (12th Ed, Routledge, 2013) 230 28 [1983] QB 284 at 297 29 [1983] QB 284 at 297 30 [1983] 1 All ER 101 at 104


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contractor’s liability when upon natural meaning of the words it plainly did. 31 A clear

framework has enabled judges to construe exemption clauses with greater ease, with greater

clarity on the rules of construction.

The Unfair Contract Terms Act 1977

Although previous legislation had enabled courts to invalidate exclusion clauses in

specific situations, UCTA was the first general regime giving judges authority to

interfere with terms of a contract because they are substantively unreasonable.32

UCTA often subjects clauses to the ‘requirement of reasonableness’ and the content of the

test must be considered when drafting exemption clauses that fall within its scope. 33 Under

UCTA, the reasonableness test is set against the ‘time frame’ of when the contract was

formulated with detailed consideration provided in due course.

UCTA has controlled exclusion clauses through section 3(1), in which one party has dealt

with the other on the party’s written standard terms of business. 34 One purpose of this section

is to prevent a party from breaching a standard form contract from relying on the exemption

clause unless the clause satisfies the statutory test of reasonableness. 35 Unlike other

jurisdictions, the controls provided by the legislation have manifested difficulties surrounding

the interpretation of ‘written standard terms of business’. 36 This initiates a complexity

whereby courts struggle in interpreting whether a contract falls within the scope of Section

3(1). This was highlighted in the case of R &B Custom Brokers Co Ltd37 which was decided

under Section 6(2) of UCTA, but the court’s interpretation of Section 2 was equally

31 O’Sullivan & Hilliard, The Law of Contract (4th ed OUP 2010) 195 32 O’Sullivan & Hilliard, The Law of Contract (4th ed OUP 2010) 200 33 s.11 Unfair Contract Terms Act 1977 34 Section 3(1) Unfair Contract Terms Act 1977 35 Section 11 Unfair Contract Terms Act 1977 36 Yates, Exclusion Clauses in Contracts (2nd ed, Sweet & Maxwell, 1982) 7 37 R &B Custom Brokers Co Ltd v United Dominions Trust Ltd [1988] 1 W.L.R. 321


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applicable to Section 3.38 The CA held defendants liable because the claimant company had

not purchased the product in the course of a business but had dealt as a consumer. This

exemplifies the disparity in which an exemption clause is construed, dependent on whether

the contracting parties are a consumer or business. However, one must consider the approach

in Stevenson v Rogers whereby the ruling in R & B was rejected with reference to Section 14

of the Sale of Goods Act.39 There is further complexity as Feldaroll Foundry Plc was ruled

using the approach in R&B.40 Once more, if one of the parties is dealing as a consumer,

Section 12(1) of UCTA would eliminate relevance to its application since all contracts in

which one of the party’s deals as a consumer are potentially controllable by Section 3, with

wider protection provided under the UTCCR’s. 41 This is a perplexity in UCTA which needs

modification in order to make it easier for courts to construe and develop their rulings to

exemption clauses.

In the relevant circumstances, UCTA will invalidate an exemption clause if it does not

‘satisfy the requirement of reasonableness’. 42 Section 11 provides the term should be a fair

and reasonable one to include, having regard to circumstance, which ought to have

reasonably been known or contemplated when contracting parties formulated the contract.43

The test is generalised, leaving a large subjective element for judicial decisions, making it

complicated for those drafting contracts to predict validity. 44 If a clause is rendered

unreasonable, the clause is rendered invalid with burden of proof on those claiming the

contract term does not satisfy the reasonableness test. 45 There has been difficulty for judges

38 Duxbury, Contract Law (2nd ed, Sweet & Maxwell, 2011) 179 39 [1988] 1 W.L.R 321. 40 [2004] EWCA Civ. 747 41 Section 12(1) Unfair Contract Terms Act 1977 42 Macdonald, Koffman ‘The Law of Contract’ (1st ed, OUP, 2011) 199 43 Section 11(1) Unfair Contract Terms Act 1977 44 Peel, Reasonable Exemption Clauses [2001] 117 L.Q.R 545-552 45 S 11(5) Unfair Contract Terms Act 1977


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in construing an exemption clause on its own merits due to the fact each case is dependent on

its own circumstances.

Construing Exemption Clauses after UCTA 1977

The judges have considered the scope provided by the test and explained the approach

concisely in George Mitchell Ltd v Finney Lock Seeds Ltd.46 On appeal their Lordships held

the clause to be sufficiently clear and unambiguous to cover the breach. Lord Bridge reverted

to guidelines on reasonableness in Section 55(5) of the Sales of Goods Act which are now

displayed in Schedule 2 of UCTA.47 Bridge stated there would be contributing factors to

every case in deciding whether an exemption clause would be construed as valid under the

reasonableness test. The case of Smith v Eric Bush elucidated upon the requirement of

reasonableness further.48 Lord Griffiths stated four questions should always be considered:

Bargaining power between the parties, the reasonable practicality of retrieving advice from

an alternative source, the difficulty of the task in which liability is being excluded and the

practical consequences. In this respect, Smith v Bush has laid down a general principle,

making it one of the most significant cases decided under UCTA. 49 There are limits to the

freedom of contractual approach in commercial cases under UCTA. 50 Judges need to be

careful not to infringe upon this freedom when construing the exemption clause for

unreasonableness. Guidelines under Smith and Schedule 2 of UCTA have provided flexibility

whilst adhering to a coherent framework for application to case specific facts. Courts need to

develop the test further to ensure any existing difficulties are eradicated.

46 [1983] A.C. 803 47 Sales of Goods Act 1979, Section 55(5) 48 [1990] 1 A.C. 831 49 St Albans City & DC v International Computers Ltd [1996] 4 All E.R 481 50 Balmoral Group Ltd v Borealis (UK) Ltd [2006] EWHC 1900 (Comm.)


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Contractual Liability & Negligence

Contractual liability is held to be ‘strict’.51 This ensures contracting parties are undertaking

obligations of the contract, whilst taking more than reasonable care. It proves the reliance on

‘strict liability’ for the party relying on the exemption clause. As a result, courts have always

been hostile in attempts to exclude liability for negligence. The courts will construe an

exemption clause invalid unless clear words are used in the terms.52 This is highlighted in

Canada Steamship Lines Ltd v The King whereby an exclusion clause in a lease, which did

not mention negligence explicitly, was held to not cover liability for resulting negligence.53

Prior to UCTA, courts preferred to be illogical whereas at present, attempts to exclude

liability for negligence to damage or loss of property must pass UCTA’s test of

reasonableness. This has placed less of an incentive for courts to scrutinise construction of

the clauses and notices to prevent parties’ from covering negligence. 54 This was highlighted

in HiH Casualty and General Insurance Ltd where it was held the Canada Steamship

instructions should not be applied mechanistically.55 This has manifested an area of flexibility

in interpreting exemption clauses for negligence. The courts’ have applied a contextual

approach which is flexible when construing the construction for all other contractual terms.56

This is a significant area of negligence which has been improved since implementation of a

statutory framework, even though it is unclear whether the Canada Steamship guidelines

remain relevant as it has not been overruled. Protection for negligence has improved through

implementation of UCTA which has aided judges with the tool to construe exemption clauses

exempting liability.

51 Mckendrick, Contract Law {10th ed, Palgrave MacMillan, 2013) 195 52 Duxbury, Contract Law (2nd ed, Sweet & Maxwell, 2011 168 53 [1952] A.C. 192 54 Williams, Lambert, ‘Exemption Clauses under scrutiny’ [1997] 3 W.L.R 1046. 55 HIH Casualty and General Insurance Ltd v Chase Manhattan Bank [2003] UKHL 6 56 Investors Compensation Scheme v West Bromwich Building Society [1998] 1 All ER 98


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Section 2 is significant and a widely applicable section. It combats liability arising from

negligence as Section 2(1) prevents exclusion or liability for negligently causing death or

personal injury. 57 This section would have been useful in disposing of the argument in

Thornton v Shoe Lane Parking Ltd that the personal injury in which Shoe Lane Parking

negligently caused was covered by an exemption clause. 58 The implementation of Section

2(1) has resulted in less need for a restrictive approach to be taken to construction of

exemption clauses.59 It is worth noting, had provisions of UCTA been in force, the CA would

have construed the exemption clause in Hollier v Rambler (AMC) Motors Ltd the same

way.60 The Law Commission’s proposals for unification of both UCTA 1977 and the 1999

Regulations would maintain level of controls provided by UCTA over exemption clauses

dealing with negligence. This element of contract law has been subject to positive reform as a

result of UCTA, eradicating any ambiguities resulting from the allowance of negligence

liability to be excluded in an exemption term.

Courts still begin with common law rules, before considering whether legislation applies.

Legislative improvement has greatly reduced significance of the common law rules, but

remains relevant as some contracts do not fall within the legislative framework. 61 The body

of case law directed at exclusion clauses is still of sufficient importance to merit separate

treatment. Despite statutory interventions common law remains very important, not least

because its rules apply to all contracts, whereas the UCTA and UTCCR apply in certain

situations.62 In West Bromwich Lord Hoffmann stated:

57 Section 2(1) UCTA 1977 58 [1971] 2 QB 163 59 Mckendrick, Contract Law {10th ed, Palgrave MacMillan, 2013) 195 60 [1972] 2 QB 71 61 O’Sullivan & Hilliard, The Law of Contract (4th ed OUP 2010) 195 62 Stone, The Modern Law of Contract (12th Ed, Routledge, 2013) 230


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‘Almost all the old intellectual baggage of ‘legal’ interpretation has been discarded’.63

Hoffman implies that courts can discard traditional common law rules when construing

exclusion clauses. Although as Phillips said wryly in The Tychy,64 ‘a little intellectual hand

luggage is no bad thing when construing a contract’. So the current status of these rules is not

entirely certain. Hoffmann may simply have been intending to identify that since UCTA,

courts no longer need this sort of artificial approach (Common Law) to construction and have

rejected it. On the contrary, it does provide reliable evidence to show UCTA has been a

useful framework when construing exemption clauses.

Terms drafted may appear to be ambiguous, although this was clarified with the changed

approach to construction post Investors Compensation Scheme v West Bromwich Building

Society.65

The Unfair Contract Terms Act 1977 has not changed the need to construe the contract. Once

it has established the exemption clause is incorporated into the contract, one would consider

the drafting and whether it covers what has occurred. This is significant as if the clause has

been inappropriately drafted, UCTA will have a negligible impact.66

It has been suggested the legislative intention behind UCTA might be used by the courts to

rationalise common law powers in dealing with an unfair term which did not fall within

particular extent of the act.67 Particularly where consumers are involved, there is a risk that

exclusion clauses will be used in a manner which exploits the inferior bargaining position of

the other party in a wholly unreasonable way. 68 Initially, the courts developed a number of

doctrines to meet these concerns; UCTA to regulate exclusion clauses in certain areas;

63 Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 W.L.R 898 64 The Tychy (No.2) [2001] EWCA Civ 1198 65 [1998] 1 All ER 98. 66 Boomsman v Clark and Rose Ltd [1983] SLT 67 67 Timeload v British Telecommunications plc [1995] EMLR 459 68 O’Sullivan & Hilliard, The Law of Contract (4th ed OUP 2010) 193


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finally, a more generalised consumer protection regime for controlling unfair terms, the

UTTCR’s 1999.

Contra Proferentem

Following Common Law, ambiguous clauses are construed ‘contra proferentem’. This

principle means the clause is construed against interests of the party seeking to rely on it;

thus, ambiguities are resolved in favour of the party who would be bound by it. 69 Before

UCTA, courts managed to find ambiguities where none would exist; therefore construe

clauses most artificially, so it would not cover the contractor’s liability. 70 This is exemplified

in Webster v Higgin, whereby a sale contract appearing to contain a thorough exemption

clause was construed as being ambiguous in the present tense. 71 The courts concluded the

clause did not comprise oral warranties prior to forming the contract. Thus after UCTA, the

CA stated the contra proferentem rule provides hazard to ‘creating’ ambiguities when none

exist.72 In Macey v Qazi it was stated the Contra Proferentem principle should only be used

as a last resort.73 It was applied by the Court of Appeal in Pratt v Aigaion to construe a clause

ambiguous in favour of the insurer in an insurance contract.74 The Rule is still used in courts,

but interpreted with caution. It is only used where there is genuine ambiguity in the wording

of a clause and not as an excuse for reading contracting terms in an artificial way. Courts are

unwilling to intervene with freedom of contract and currently favour use of statute to combat

ambiguities. In conclusion, it proves UCTA has modified the way courts construe exemption

clauses under the contra proferentem rule.

69 O’Sullivan & Hilliard, The Law of Contract (4th ed OUP 2010) 197 70 Lewison ‘The interpretation of Contracts’ [2005] 121 L.Q.R 158 71 [1948] 2 All ER 127 72 Direct Travel v McGeown [2003] EWCA Civ 1606 73 [1987] CLY 435 74 Pratt v Aigaion Insurance Company [2008] EWCA Civ 1314


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Proposals for Reform

There has been overlap between UCTA and the 1999 Regulations, creating confusion when

construing an exemption clause. There is significant nebulousness between controls over

exclusion clauses contained in UCTA 1977 and UTCCR 1999. In addition, UCTA is a

complex statute75, making it difficult to comprehend; particularly for the non- lawyer reader,

segments of UTCCR 1999 are expressed in Alien language.76

In 2002, the Law Commission issued a Consultation Paper which proposed simplification and

unification of both pieces of law into one piece of legislation. In their Unfair Terms in

Contracts report, their views differed slightly with consumers receiving wider protection. The

bill achieves this from covering not just exclusion clauses but all terms. At present

businesses do not apply to the 1999 Regulations, yet can claim provision from UCTA with

regard to exempting liability. Courts have held exemption clauses unreasonable with

reluctance, as it potentially unsettles commercial transactions. The draft bill recognises a

‘business’ can vary greatly, inferring the necessity to procure protection to small businesses,

with weak bargaining power. Once more, the draft bill will retain provisions of UCTA but

would catch exemption clauses that have not been individually negotiated, which are

contained in standard form. This is significant as it eradicates complexities surrounding the

current parallel legislative regime. It would demonstrate equity in protection of consumers

and vulnerable small businesses, whilst restricting protection provided under existing

provisions for large businesses. Since the Molony report (Final Report of the Committee on

Consumer Protection) most of the legislative effort in the field of commercial law has been

directed towards consumer protection.77 In such difficult circumstances the consumer will

frequently find it beyond his power to make an informed choice, or may hold little bargaining

75 Unfair Terms in Contracts, Law Com No 292, Scot Law Com No 199, Cm 6464, 2005, para 1.14 76 Unfair Terms in Contracts, Law Com No 292, Scot Law Com No 199, Cm 6464, 2005, para 1.15 77 Diamond, Molony Commitee Final Report of the Commitee on Consumer Protection [1963] 1 M.L.R 26, 66


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power with no choice at all. This infers Consumers are vulnerable to exploitation and

deception, both in relation to exemption of liability of the goods or services received and in

relation to legal arrangements under which they are supplied.78

At present it is unknown as to whether the bill will be implemented. The government should

have acted sooner to eradicate current intricacies surrounding particular areas of law

controlling exemption clauses. The UK government has to respond to the European’s

Commissions proposals of harmonising the Consumer Rights Directive. 79 This aimed to

extend four existing consumer Directives relating to unfair terms and exemption clauses in

consumer contracts. The UK has chosen to implement limited parts of the Directive through

the Consumer Rights (Payments Surcharges) Regulations 2012 80and other aspects intended

to be concluded in the Consumer Bill of Rights and Consumer Protection from Unfair

Trading (Amendments) Regulations. 81 However, although there has been an attempt to

eliminate complications, the omission of synthesis is making it harder for judges to construe

reasonable exemption clauses for the purpose of excluding liability. In 2012, a further

consultation paper focussing specifically on consumer contracts was issued. 82 The Law

Commission still believed its recommendations in the 2005 report were correct. 83 As yet,

however, there is no indication of when any significant reform of the legislation will occur. It

remains to be seen whether the government will consult the Law Commission further to

provide guidance on improving efficiency in unifying existing legislation, a result that would

benefit the judges’ attempts to construe exemption clauses.

78 Macdonald, Exemption Clauses and Unfair Terms [2000] 11(6) I.C.C.L.R. 233-234 79 Consumer Rights Directive 2011/83/EU 80 The Consumer Rights (Payment Surcharges) Regulations 2012 81 The Consumer Protection from Unfair Trading Regulations 2008

82 Unfair Terms in Consumer Contracts: A new approach? Issues Paper, Law Commission and Scottish Law

Commission, July 2012. 83 Stone, The Modern Law of Contract (12th Ed, Routledge, 2013) 269


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Conclusion

Many developed countries have sought to combat complexities arising from inequality of

bargaining power and exemption clauses by legislation. 84 Acts appear more comprehensive

but UCTA is indefinitely the most significant statute in English Contract Law since the

implementation of the Statute of Frauds. The act is subject to scrutiny as it makes a negative

contribution to eradicating complexities by not rendering the previous law redundant, for

example, the Canada Steamship guidelines. This requires the courts to recognise the whole of

the common law prior to consideration of the statute, whilst the act itself is not internally

simple. Its scope cannot be concisely stated as sections between UTCCR’s and UCTA

overlap confusingly. The role of the common law, especially the rules of construction are

likely to diminish in the future, although the Contra Proferentem rule is likely to apply to

cases of genuine ambiguity.

In summary, UCTA has been a significant tool in the method of construing exemption

clauses. Although complexities remain, especially concerning business to consumer

contracts, it has clarified confusing areas of Common Law. Having a codified statutory

control ensures decision making can deliver clarity; at greater ease. The Common Law

provides an insight into the subjective nature of the reasonableness test, proving it still holds

usefulness for when the judges’ are interpreting exemption clauses in a contract. The research

project has clarified previous presumptions that UCTA has aided in construing exemption

clauses. One would have to consider the influx of European intervention with Contract Law

and how this will potentially affect future legislation surrounding exemption clauses. For

now, UCTA will serve as the lead tool for judges in the courts when construing exemption

clauses.

84 Isreali Standard Contracts Law 1964


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Bibliography:

Statute:

Consumer Rights Bill 2008

Consumer Rights (Payment Surcharges) Regulations 2012

Isreali Standard Contracts Law 1964

Sales of Goods Act 1979

Unfair Contract Terms Act 1977

Unfair Terms in Consumer Contract Regulations 1999

E.U Directive:

Consumer Rights Directive 2011/83/EU

Case Law:

Ailsa Craig Fishing Co Ltd v Malvern Fishing Co Ltd

Balmoral Group Ltd v Borealis (UK) Ltd [2006] EWHC 1900 (Comm.)

Boomsman v Clark and Rose Ltd [1983] SLT 67

Canada Steamship Lines Ltd v The King [1952] A.C. 192

Chapelton v Barry Urban District Council [1940] 1 KB 532

Curtis v Chemical Cleaning and Dyeing Co [1951] 1 KB 805 per Denning LJ at 808

Direct Travel v McGeown [2003] EWCA Civ 1606

Feldaroll Foundry Plc [2004] EWCA Civ. 747

George Mitchell (Chesterhall) Ltd v Finney Lock Seeds Ltd [1983] QB 284 at 28

HIH Casualty and General Insurance Ltd v Chase Manhattan Bank [2003] UKHL 6

Hollier v Rambler (AMC) Motors Ltd [1972] 2 QB 71

Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd [1988] 1 All ER 348

Investors Compensation Scheme v West Bromwich Building Society [1998] 1 All ER

98

J Evans & Sons (Portsmouth) Ltd v Abdrea Merzario Ltd [1976] 1 WLR 1078.

J Spurling Ltd v Bradshaw [1956] 1 WLR 461 at 466.

Kendall v Lillico [1969] 2 AC 31

L’Estrange v F Graucob Ltd [1934] 2 KB 394 per Scrutton LJ at 403.

Macey v Qazi [1987] CLY 435

Olley v Marlborough Court [1949] 1KB 532

Parker v South Easter Railway (1877) 2 CPD 416

Pratt v Aigaion Insurance Company [2008] EWCA Civ 1314

R &B Custom Brokers Co Ltd [1988] 1 W.L.R. 321

Skipskredittforeningen v Emperor Navigation SA [1977] CLC 1151

Smith v Eric Bush [1990] 1 A.C. 831

St Albans City & DC v International Computers Ltd [1996] 4 All E.R 481

Stevenson v Rogers [1988] 1 W.L.R 321.

The Tychy (No.2) [2001] EWCA Civ 1198

Thornton v Shoe Lane Parking Ltd [1971] 2 QB 163


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Timeload v British Telecommunications plc [1995] EMLR 459

Watford Electronics Ltd v Sanderson CFL Ltd [2001] 1 All Er (Comm) 696

Webster v Higgin [1948] 2 All ER 127

Other:

Diamond, Molony Commitee Final Report of the Commitee on Consumer Protection [1963] 1 M.L.R 26, 66

Unfair Terms in Consumer Contracts: A new approach? Issues Paper, Law Commission and Scottish Law Commission, July 2012.

Textbooks:

Duxbury, Contract Law (2nd ed, Sweet & Maxwell, 2011)

Macdonald, Koffman, ‘The Law of Contract’ (1st ed, OUP, 2011)

Mckendrick, Contract Law (10th ed, Palgrave MacMillan, 2013)

O’Sullivan & Hilliard, The Law of Contract (4th ed OUP 2010)

Stone, The Modern Law of Contract (12th Ed, Routledge, 2013)

Journals:

Browsword, Adams ‘The Unfair Contract Terms Act: A decade of discretion’ [1988]

104 L.Q.R 94-119

Globe, Exemption Clauses and Repudiatory Breach - a "Personal" view: Nett v

MARHedge [2009] 20(7) Ent. L.R. 259-261

Johnson, Unfair Contract Terms: Implementation problems [1994] 13(6) I.B.F.L 66-

68

Lewison ‘The interpretation of Contracts’ [2005] 121 L.Q.R 158-161

Macdonald, Exemption Clauses and Unfair Terms [2000] 11(6) I.C.C.L.R. 233-234

Peel, Reasonable Exemption Clauses [2001] 117 L.Q.R 545-552

Rubino-Sammartano, Exemption Clause in Contracts [1980] 46(4) Arb. 250-251

Sproul, Contract Terms [1991] 10(3) I.B.F.L 37-38

Williams, Lambert, ‘Exemption Clauses under scrutiny’ [1997] 3 W.L.R 1046.

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