Unfair Contract Terms Act 1977

PART II S AMENDMENT OF LAW FOR SCOTLAND

15 Scope of Part II.S

(1)This Part of this Act [F1. . .] is subject to Part III of this Act and does not affect the validity, of any discharge or indemnity given by a person in consideration of the receipt by him of compensation in settlement of any claim which he has.

F2(2)Subject to subsection (3) below, sections 16 [F2and 17] of this Act apply to any contract only to the extent that the contract—

(a)relates to the transfer of the ownership or possession of goods from one person to another (with or without work having been done on them);

(b)constitutes a contract of service or apprenticeship;

(c)relates to services of whatever kind, including (without prejudice to the foregoing generality) carriage, deposit and pledge, care and custody, mandate, agency, loan and services relating to the use of land;

(d)relates to the liability of an occupier of land to persons entering upon or using that land;

(e)relates to a grant of any right or permission to enter upon or use land not amounting to an estate or interest in the land.

F3(3)Notwithstanding anything in subsection (2) above, sections 16 [F3and 17] —

(a)do not apply to any contract to the extent that the contract—

(i)is a contract of insurance (including a contract to pay annuity on human life);

(ii)relates to the formation, constitution or dissolution of any body corporate or unincorporated association or partnership;

(b)apply to—

a contract of marine salvage or towage;

a charter party of a ship or hovercraft;

a contract for the carriage of goods by ship or hovercraft; or,

a contract to which subsection (4) below relates,

only to the extent that—

(i)both parties deal or hold themselves out as dealing in the course of a business (and then only in so far as the contract purports to exclude or restrict liability for breach of duty in respect of death or personal injury); [F4or]

F4(ii). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4)This subsection relates to a contract in pursuance of which goods are carried by ship or hovercraft and which either—

(a)specifies ship or hovercraft as the means of carriage over part of the journey to be covered; or

(b)makes no provision as to the means of carriage and does not exclude ship or hovercraft as that means,

in so far as the contract operates for and in relation to the carriage of the goods by that means.

16 Liability for breach of duty.S

(1)[F5Subject to subsection (1A) below,] Where a term of a contract [F5, or a provision of a notice given to persons generally or to particular persons,] purports to exclude or restrict liability for breach of duty arising in the course of any business or from the occupation of any premises used for business purposes of the occupier, that term [F5or provision]—

(a)shall be void in any case where such exclusion or restriction is in respect of death or personal injury;

(b)shall, in any other case, have no effect if it was not fair and reasonable to incorporate the term in the contract [F5or, as the case may be, if it is not fair and reasonable to allow reliance on the provision].

[F6(1A)Nothing in paragraph (b) of subsection (1) above shall be taken as implying that a provision of a notice has effect in circumstances where, apart from that paragraph, it would not have effect.]

(2)Subsection (1)(a) above does not affect the validity of any discharge and indemnity given by a person, on or in connection with an award to him of compensation for pneumoconiosis attributable to employment in the coal industry, in respect of any further claim arising from his contracting that disease.

(3)Where under subsection (1) above a term of a contract [F7or a provision of a notice] is void or has no effect, the fact that a person agreed to, or was aware of, the term [F7or provision] shall not of itself be sufficient evidence that he knowingly and voluntarily assumed any risk.

[F8(4)This section does not apply to—

(a)a term in a consumer contract, or

(b)a notice to the extent that it is a consumer notice,

(but see the provision made about such contracts and notices in sections 62 and 65 of the Consumer Rights Act 2015).]

F917F9 Control of unreasonable exemptions in ... standard form contracts.S

F10(1)F10Any term of a contract which is ... a standard form contract shall have no effect for the purpose of enabling a party to the contract—

F11(a)who is in breach of a contractual obligation, to exclude or restrict any liability of his to the F11... customer in respect of the breach;

F12(b)in respect of a contractual obligation, to render no performance, or to render a performance substantially different from that which the F12... customer reasonably expected from the contract;

if it was not fair and reasonable to incorporate the term in the contract.

(2)In this section “customer” means a party to a standard form contract who deals on the basis of written standard terms of business of the other party to the contract who himself deals in the course of a business.

[F13(3)This section does not apply to a term in a consumer contract (but see the provision made about such contracts in section 62 of the Consumer Rights Act 2015).]

F1418 Unreasonable indemnity clauses in consumer contracts.S

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F1519“Guarantee” of consumer goods.S

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

20 Obligations implied by law in sale and hire-purchase contracts.S

(1)Any term of a contract which purports to exclude or restrict liability for breach of the obligations arising from—

(a)section 12 of the Sale of Goods Act [F161979] (seller’s implied undertakings as to title etc.);

(b)section 8 of the M1 Supply of Goods (Implied Terms) Act 1973 (implied terms as to title in hire-purchase agreements),

shall be void.

[F17(1A)Any term of a contract which purports to exclude or restrict liability for breach of the obligations arising from—

(a)section 13, 14 or 15 of the 1979 Act (seller's implied undertakings as to conformity of goods with description or sample, or as to their quality or fitness for a particular purpose);

(b)section 9, 10 or 11 of the 1973 Act (the corresponding things in relation to hire purchase),

shall have effect only if it was fair and reasonable to incorporate the term in the contract.

(1B)This section does not apply to a consumer contract (but see the provision made about such contracts in section 31 of the Consumer Rights Act 2015).]

F18(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

21 Obligations implied by law in other contracts for the supply of goods.S

(1)Any term of a contract to which this section applies purporting to exclude or restrict liability for breach of an obligation[F19such as is referred to in subsection (3) below shall have no effect if it was not fair and reasonable to incorporate the term in the contract.]

(2)This section applies to any contract to the extent that it relates to any such matter as is referred to in section 15(2)(a) of this Act, but does not apply to—

(a)a contract of sale of goods or a hire-purchase agreement; or

(b)a charterparty of a ship or hovercraft F20....

(3)An obligation referred to in this subsection is an obligation incurred under a contract in the course of a business and arising by implication of law from the nature of the contract which relates—

(a)to the correspondence of goods with description or sample, or to the quality or fitness of goods for any particular purpose; or

(b)to any right to transfer ownership or possession of goods, or to the enjoyment of quiet possession of goods.

[F21(3A)Notwithstanding anything in the foregoing provisions of this section, any term of a contract which purports to exclude or restrict liability for breach of the obligations arising under section 11B of the Supply of Goods and Services Act 1982 (implied terms about title, freedom from encumbrances and quiet possession in certain contracts for the transfer of property in goods) shall be void.]

[F22(3B)This section does not apply to a consumer contract (but see the provision made about such contracts in section 31 of the Consumer Rights Act 2015).]

(4)F23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F2422 Consequence of breach.S

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

23 Evasion by means of secondary contract.S

Any term of any contract shall be void which purports to exclude or restrict, or has the effect of excluding or restricting—

(a)the exercise, by a party to any other contract, of any right or remedy which arises in respect of that other contract in consequence of breach of duty, or of obligation, liability for which could not by virtue of the provisions of this Part of this Act be excluded or restricted by a term of that other contract;

(b)the application of the provisions of this Part of this Act in respect of that or any other contract.

24 The “reasonableness” test.S

(1)In determining for the purposes of this Part of this Act whether it was fair and reasonable to incorporate a term in a contract, regard shall be had only to the circumstances which were, or ought reasonably to have been, known to or in the contemplation of the parties to the contract at the time the contract was made.

(2)In determining for the purposes of section 20 or 21 of this Act whether it was fair and reasonable to incorporate a term in a contract, regard shall be had in particular to the matters specified in Schedule 2 to this Act; but this subsection shall not prevent a court or arbiter from holding, in accordance with any rule of law, that a term which purports to exclude or restrict any relevant liability is not a term of the contract.

[F25(2A)In determining for the purposes of this Part of this Act whether it is fair and reasonable to allow reliance on a provision of a notice (not being a notice having contractual effect), regard shall be had to all the circumstances obtaining when the liability arose or (but for the provision) would have arisen.]

(3)Where a term in a contract [F26or a provision of a notice] purports to restrict liability to a specified sum of money, and the question arises for the purposes of this Part of this Act whether it was fair and reasonable to incorporate the term in the contract [F26or whether it is fair and reasonable to allow reliance on the provision], then, without prejudice to subsection (2) above [F26in the case of a term in a contract], regard shall be had in particular to—

(a)the resources which the party seeking to rely on that term [F26or provision] could expect to be available to him for the purpose of meeting the liability should it arise;

(b)how far it was open to that party to cover himself by insurance.

(4)The onus of proving that it was fair and reasonable to incorporate a term in a contract [F27or that it is fair and reasonable to allow reliance on a provision of a notice] shall lie on the party so contending.

25 Interpretation of Part II.S

F28F29F30(1)In this Part of this Act—

• “breach of duty” means the breach —

  (a)

  of any obligation, arising from the express or implied terms of a contract, to take reasonable care or exercise reasonable skill in the performance of the contract;

  (b)

  of any common law duty to take reasonable care or exercise reasonable skill;

  (c)

  of the duty of reasonable care imposed by section 2(1) of the M2 Occupiers’ Liability (Scotland) Act 1960;

• “business” includes a profession and the activities of any government department or local or public authority;

• F30...F30...F30...

• [F29“consumer contract” has the same meaning as in the Consumer Rights Act 2015 (see section 61);]

• [F28 “ consumer notice ” has the same meaning as in the Consumer Rights Act 2015 (see section 61); ]

• “goods” has the same meaning as in [F31the Sale of Goods Act 1979];

• “hire-purchase agreement” has the same meaning as in section 189(1) of the Consumer Credit Act 1974;

• [F32 “ notice ” includes an announcement, whether or not in writing, and any other communication or pretended communication ]

• “personal injury” includes any disease and any impairment of physical or mental condition.

F33(1A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F33(1B). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2)In relation to any breach of duty or obligation, it is immaterial for any purpose of this Part of this Act whether the act or omission giving rise to that breach was inadvertent or intentional, or whether liability for it arises directly or vicariously.

(3)In this Part of this Act, any reference to excluding or restricting any liability includes—

(a)making the liability or its enforcement subject to any restrictive or onerous conditions;

(b)excluding or restricting any right or remedy in respect of the liability, or subjecting a person to any prejudice in consequence of his pursuing any such right or remedy;

(c)excluding or restricting any rule of evidence or procedure;

(d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F34

but does not include an agreement to submit any question to arbitration.

(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F34

F35(5)In sections 15 [F35, 16, 20 and] 21 of this Act, any reference to excluding or restricting liability for breach of an obligation or duty shall include a reference to excluding or restricting the obligation or duty itself.