5.2.2 What is the effect of s3?
Section 3(2) states:
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.claim 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 (in any of the cases mentioned above in this subsection) the contract term satisfies the requirement of reasonableness.
(UCTA 1977)
In other words, where section 3 applies, a clause excluding or limiting liability for breach of contract must pass a ‘reasonableness’ test.