Contract Wksp 3

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Sale and Supply of Goods to Consumers Regulations 2002

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Most recent amendment to the SGA 1979 and the SGSA 1982

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Condition

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a major term in a contract

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Warranty

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a minor contract term

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s8 SGA 1979

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Where the price is not fixed in the contract or ascertainable in one of the other ways stated in s8(1) then the buyer must pay a reasonable price.

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s13 SGA 1979

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Where there is a contract for the sale of goods by description implies a condition that the goods will be of satisfactory quality

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s14(2) SGA 1979

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Where the seller in the course of a business, implies a condition that the goods supplied will be of satisifactory quality.

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s14(3) SGA 1979

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Where the seller is selling in the course of a business and the buyer expressly or by implication makes known any particular purpose for which the goods are being bought, s14(3) implies a condition that the goods supplied are reasonbly fit for that purpose.

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Remedies to breach of SGA implied conditions

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1. Reject goods and recover money (if no exceptions apply)
2. If the buyer is a consumer there are additional remedies which may be available, eg repair/replacement of goods.
3. In any event, the buyer may also be able to claim damages.

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Rejection of goods/recovery of money remedy to SGA condition violation not available if...

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1. The buyer is not buying as a consumer and the breach is so slight it would be unreasonable to reject; or
2. The buyer has accepted goods, eg by keeping the goods beyond a resonable time without intimating rejection.

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s3 SGSA 1982

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Implies a term that goods will correspond with the description

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s4(5) SGSA 1982

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Implies a term that goods are reasonably fit for any particular purpose which the transferee makes known.

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s13 SGSA 1982

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Implies a term that the supplier of a service will carry out the service with reasonable care and skill.

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s14 SGSA 1982

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When the supplier of a service is acting in the course of a business implies that the service will be carried out with a reasonable time.

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s15 SGSA 1982

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Where there is no price for a service given implies that a reasonable charge will be paid.

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Exemption Clause

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A clause which seeks to exclude liability completely or to limit liability if a breach of contract occurs or a tort is committed.

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Three main ways that a provision may be incorporated into a contract

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- By signature
- By notice
- By consistent course of dealings between the parties

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L'Estrange v Graucob

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Exemption clause in 'regrettably small print' (was still legible) but court found that the clause was incorporated into the contract because it had been signed.

- Only the C needs to have signed it
- Must be a contractual document, in other words the sort of document which people in general might assume contained some terms of the contract.

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Situations where an exemption clause will not be incorporated into the contract.

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- The exemption clause is not legible
- Clause has been inaccurately described to the innocent party (Curtis v Chemical Cleaning and Dyeing Co)

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Chapelton v Barry UDC

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The document containing the clause must be contractual in nature.

Ct decided that a deck chair ticket was not contractual in nature as a resonible perrson would regard it as a mere recipt. Not regarded as a document which might contain terms on which the C had hired the chair.

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Parker v South Eastern Railway

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The innocent party must either know of the clause or the party relying on the clause must have taken reasonable steps to bring it to the other's notice before the contract is finialized.

Factor's considered are:
-Position of the clause on the doc
- Prominance of the clause
- Type and nature of clause e.g.-unusual or onerous

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Thorton v Shoe Lane Parking

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To incorporate an onerous or unusual clause, the attention of the other P must be drawn to it in the most explicit way.

In Spurling v Bradshaw Lord Denning said it would be necessary for it to be 'printed in red ink with a red hand pointing to it or something equally startling.'

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Interfoto Picture Library v Stiletto Visual Programmes Ltd

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Applied the rules for explicit incorporation of onerous clauses to a business situation. Just a regular clause that charged an exorbitant late fee.

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Olley v Marlborough Court Ltd

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Clause must be incorporated before the contract is signed.

- Notice that hotel not liable for stolen goods posted in the room but this was too late as it was after contract signing. Would have been acceptable if regular user of the hotel, should have known from previous trips.

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Kendall (Henry) and Sons v Lillico and Sons Ltd

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For incorporation by a previous consistent course of dealings. The dealings must amount to a 'course' of dealings i.e.- a sufficient number of regular dealings.

- Three or four times a month for three years satisfied the course of dealings in this case

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Hollier v Rambler Motors

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C had his car serviced by the D's garage only three or four times over five years. This did not amount to a course of dealings.

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McCutheon v MacBrayne Ltd

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Although Ps had dealt with each other many times sometimes the docs were signed and sometimes not. The HoL decided that the exemption clause hadn't been incorporated as the dealings had not been consistent.

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Contra Proferentem rule

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If a P tries to rely on a clause which is ambiguous or unclear, the ct will interpret the clause against him.

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Houghton v Traflager Insurance

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The Contra Proferentem rule

- A five seater car was involved in an accident carrying six people. The insurance company wanted to rely on a clause in the insurance policy which exempted it from liability if the car was carrying an 'excessive load'.

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Canada Steamship Lines v The King

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Established guidelines for exemption clause wording

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Exemption clause wording guidelines

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- If the clause expressly exempts a P from liability for negligence then it will be effective.
- If it could cover liability other than negligence, eg strict liability, ct may decide it won't apply to negligence.

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Monarch Airlines Ltd v London Luton Airport

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Ct may take more relaxed approach to exemption clause guidelines in a commercial context.
- Airplane dmages on runway vague clause limiting liability allowed by ct.

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Photo Productions Ltd v Securicor Transport Ltd.

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In a very serious or deliberate breach of contract, it is a matter of construction whether the exemption clause covers the breach. If the clause is clearly worded, it may cover the breach which has occurred even if the breach is very serious or deliberate.

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s6 UCTA 1977

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A seller can't exclude or restrict liability for breach of implied s13 and s14 SGA 1979 when ' dealing with a customer;. In other cases, the exemption clause must pass the reasonableness test.

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s12 UCTA 1977

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'dealing as a consumer'- to deal as a customer, the P mustn't make the contract in the course of business, and the other P must make the cnt in the course of business.

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s7 UCTA 1977

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Liability for breach of s3 and 4 SGSA 1982 can't be excluded when dealing with consumer. Otherwise, must satisfy reasonableness test.

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s2(1) UCTA 1977

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`Can't exclude or restrict liability for negligence where it causes death or PI.

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s11 UCTA 1977

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Sets out the reasonableness test

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Reasonableness Test for Exemption Clauses

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The exemption clause must've been a fair and reasonable one to include having regard to the circumstances which were (or ought to reasonably have been) known to the PS or within the contemplation of the Ps when the cnt was made.
- Burden on person trying to rely on clause to prove it is reasonable.

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Sch 2 UCTA 1977 Guidelines

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Guidelines Ct accounts for when applying reasonableness test:
A) The relevant strength of the bargaining positions of the 2 Ps
B) Did the customer receive an inducement to agree to the exemption or did they have an opportunity to similar cnt elsewhere?
C) Whether the customer knew or ought reasonably to have known, of the existence and extent of the clause, taking into account any trade custom or previous dealings between the Ps.
D) Was compliance with clause reasonable at the time of cnt?
E) Special order

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s11(4) UCTA 1977 Guidelines

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Guidelines for ct to determine if limitation clauses reasonable:
- The resources available which the D could expect to be available to him for the purpose of meeting the liability should it arise.
- Was and how much insurance is available to D?

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Stewart Gill Ltd v Horatio Myer and Co Ltd

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Ct must look at whole course of dealings when determining if limitation clause is reasonable.

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Watford Electronics Ltd v Sanderson CFL Ltd

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If exemption clause serves two distinct purposes can be split into two parts and have reasonableness of each part decided separately.

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Smith v Eric Bush

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Along with Sch 2 guidelines for exemption clause reasonableness the ct also considered the difficulty of the task and the practical consequences of the ct's decision.

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Adler v Dickson

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Est general rule that exemption clauses can't be relied on by 3Ps.

- Ms. Adler injured boarding ship and sued master and boatswain for neg. Ct allowed since they weren't protect by exemption clause.

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Contracts (Rights of 3Ps) Act 1999

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Third Party may acquire exemption clause rights if:
- expressly provided for in cnt (s1(1)(a))
- the term purports to confer a benefit on him (s1(1)(b))