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Report No. 199

Burden of Proof

We next come to the question of burden of proof in cases falling under the head of substantive unfairness under clause (b) of section 10 and section 11. This will be referred to in section 14 of the proposed Bill.

We have noted that under clause (b) of section 9, if a contract or a term excludes or restricts liability for breach of express or implied terms of a contract without adequate justification therefore, the contract or term shall be deemed to be substantially unfair. Likewise, under section 10, any exclusion of the rights, duties or liabilities referred to in section 62 of the Sale of Goods Act shall be substantively unfair unless there is adequate justification therefore. In these two provisions, we have used the qualification that such exclusion must be for adequate justification.

The purport of section 14 as proposed will be to place the burden of proof of adequate justification of such exclusions on the party who or which relies on such exclusion.

It will be noted that under section 11(5) and 24(4) of the (UK) UCTA, 1977 the burden of proving that a contract or term is fair or reasonable is on the party claiming it to be reasonable. There was no provision in the (UK) regulation UTCCR, 1999.

The Law Commission of UK and Scotland in their Joint Report 2004 (see paras 3.124 to 3.130) recommended that "where an issue has been raised whether a term is fair and reasonable, the burden will be on the business, i.e. on the seller or supplier.

We, however, recommend such a special provision only for purposes of clause (b) of section 9 which deals with exclusion or restriction of liability for express or implied term of a contract without adequate justification or under section 10 which deals with exclusion or restriction of the rights, duties or liabilities referred to in section 62 of the Sale of Goods Act, 1930 because of the need for proof of adequate justification for such exclusion or restriction.

We, therefore, propose section 14 in the following language:

Section 14: Burden of Proof

"If a contract or a term thereof excludes or restricts liability as stated in clause (b) of section 9 or excludes or restricts rights, duties and liabilities referred to in section 62 of the Sale of Goods Act, 1930, as stated in section 10, it is for the person relying on such exclusion or restriction, to prove that it is not without adequate justification."



Unfair (Procedural and Substantive) Terms in Contract Back




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