Report No. 199

The basic features of Unfair Contract Terms Act, 1977 (UK): (UCTA)

The UCTA has separate provision for England and Scotland. It does not apply to all contracts but applies to both consumer contracts (sections 4 & 5) and contracts between business [section 6(1) and (3) - (s.20 (i), 20(2) (ii)] and also to terms and notices excluding certain liability in tort. The Act applies only to exclusion and limitation of liability clauses (and indemnity clauses in consumer contracts).

The Act makes certain exemption clause automatically ineffective, as with attempts to exclude or restrict liability for negligently caused death or personal injury but for most part it renders exemption clauses ineffective unless they satisfy the requirement of "reasonableness" as per section 11 of the act. Whether a contract satisfies the requirement of reasonableness, regard shall be had in particular to the matters specified in Schedule 2 of the Act. The burden of proof is on the party claiming that the exemption clauses satisfies the requirement of reasonableness.