5.4 The ‘reasonableness’ test
As can be seen, a number of terms under UCTA 1977 are only valid if they pass a ‘reasonableness’ test.
Activity 5 What is the test for reasonableness?
Using(UK Government, 2015a) or an internet search engine, find and read s. 11 and schedule 2 of UCTA 1977. Based on these, give a definition of the test for ‘reasonableness’ in contract terms in your own words. You should use no more than 250 words.
The starting point for the ‘reasonableness’ test is s11(1), which looks at the circumstances that were (or ought reasonably to have been) known, or in the contemplation of the parties, at the time the contract was entered into. It asks whether, having regard to these circumstances, the term was a fair and reasonable one to include. In determining this, the court must take into account the factors listed in schedule 2 (s11(2)). These include the strength of the parties’ bargaining positions, any inducements given, what the customer knew (or ought reasonably to have known) about the term, whether an affected term could reasonably have been complied with and whether the goods were customised for the customer. Under s11(4), when a limitation clause has been used (see Box 1), then the resources available to meet the liability and the availability of insurance are also considered. Under s11(5), the burden of proof is on the party arguing that the term is reasonable.