Exclusion Clauses and the Unfair Contract Terms Act

A clause may be inserted into a contract which aims to exclude or limit one party's liability for breach of contract or negligence. However, the party may only rely on such a clause if (a) it has been incorporated into the contract, and if, (b) as a matter of interpretation, it extends to the loss in question.
Its validity will then be tested under the Unfair Contract Terms Act 1977 and the Unfair Terms in Consumer Contracts Regulations 1999.

Under the Unfair Contract Terms Act 1977 a person acting in the course of his business cannot by the use of an exclusion clause in the contract excluded his liability for death or personal injury resulting from negligence.
A clause in the contract restricting liability for other loss or damage resulting from negligence is only enforceable if it is reasonable.
Similarly a clause in the contract requiring a consumer to indemnify a trader against any loss incurred through negligence or breach of contract must satisfy the same test of reasonableness

When selling or hiring goods to a consumer, a trader cannot restrict or exclude his legal obligation to provide goods which are as described and of satisfactory quality. A trader who tries to use an exclusion clause to restrict the right of consumers to receive goods which are as described and of satisfactory quality will be committing an offence. When providing services the exclusion of liability for breach of contract which would allow the trader to provide an inadequate service will only be enforceable if reasonable

It is for a court to decide whether or not a term is reasonable. It will be for the party claiming that the term is reasonable to demonstrate to the court that it is indeed reasonable.

If a trader is selling or hiring goods to a person who is not the consumer he can only restrict or exclude his legal liability to provide goods which are as described and of satisfactory quality if the clause in question satisfies the reasonableness test.

When a trader undertakes to provide a service for any person (whether or not a consumer) on his own written terms of business he similarly can only use those written terms to exclude or restrict his liability for breach of contract or to allow himself to provide an inadequate service if he can show that the term in question satisfies the test of reasonableness

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