Exclusion clauses
Exclusion clauses

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Exclusion clauses

5.2 Liability for breach of contract

Section 3 of UCTA 1977 regulates exclusion clauses seeking to exclude or limit liability for breaches of contract. This section deals with a situation where one contracting party is dealing with the other contracting party’s standard terms. The section governs the requirements of reasonableness in business contracts. For example, section 3(2) (a) states:

  1. As against that party, the other cannot by reference to any contract term –
    • a.when himself in breach of contract, exclude or restrict any liability of his in respect of the breach; or
    • b.claimed to be entitled –
    • i.to render a contractual performance substantially different from that which was reasonably expected of him, or
    • ii.in respect of the whole or any part of his contractual obligation, to render no performance at all, except in so far as the contract term satisfies the requirement of reasonableness. To understand what may be reasonable in a commercial contract you would need to consider S.11 of UCTA and the guidelines in Schedule 2 of this Act.

Please note that this section of UCTA 1977 does not apply to a term in a consumer contract. Instead, section 62 of the Consumer Rights Act 2015 deals with an unfair term and considers any significant imbalance caused by the position of the (consumer and trader) relationship and whether this would be a detriment to the consumer.

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