Chapter 12

1. 'First appearances suggest that the Unfair Contract Terms Act 1977 only applies to terms that limit or exclude liability, but the reality is far messier.' Discuss.

See 12.4.1 – 12.4.5 and diagrams 12B, C and F.

This question invites you to discuss the jurisdictional question raised by UCTA and the significance of the answer. The sub-questions you should address are:

What sorts of terms are controlled by UCTA? You must cite 'chapter and verse' of UCTA (i.e. the precise sections and sub-sections).
In particular, what sections expand the meaning of exemption clauses? How do they do that?
What uncertainties do they generate? That is, what is the scope of the extensions? Here, look at what courts and commentators have said (e.g. the 'but for' test).
Looking more deeply into the cause of the uncertainty, discuss the controversy over whether exemption clauses are 'defensive' or 'duty-defining'. Why does the answer matter (e.g. consider the legitimacy of the law controlling the reasonableness of the contract versus that of merely controlling exemptions of liability, a remedial term)?
Look at the problems in the context of the jurisdiction of the UTCCR which is not tied to exemption clauses.
Consider the Law Commission's proposals on the jurisdictional question.

2. 'The picture of legislative control of unfair terms is bewildering. Some terms are "blacklisted", some are "greylisted", some must be reasonable and some must not be unfair, whatever they mean. Reform is sorely needed.' Discuss.

See 12.5 and 12.6.

This question invites you to discuss and compare the control mechanisms of UCTA and UTCCR. The sub-questions you should consider are:

What does 'blacklisted' terms mean? Which terms are blacklisted by which legislation? Why?
What does 'greylisted' terms mean? Which terms are greylisted by which legislation? Why?
What is the actual effect of a term appearing on the greylist (e.g. what is the likely effect of a term which would be blacklisted under one legislation but is only greylisted by the other)?
What terms must be 'reasonable' under which legislation?
What terms must not be 'unfair' under which legislation?
Who has the burden of proof in each case?
Compare the reasonableness and fairness tests? Give examples and identify the sources of uncertainty (e.g. meaning of good faith).
In view of the above, is reform 'sorely needed'? Why is the current picture unsatisfactory? Refer to the Law Commission's proposal to unify and simplify the legislation. To what extent would these proposals remove the problems?

3. 'The Law Commission's suggestions to extend the current protection for consumers against unfair terms are justifiable, but its suggestions in relation to businesses go too far.' Discuss.

See 12.4.7, 12.6.2 – 12.6.3.

This question invites you to assess the Law Commission's proposals on unfair terms. The sub-questions you should consider are:

Note some general proposals (e.g. unification and simplification of the scheme on unfair terms, retention of 'blacklist' from UCTA and enforcement mechanisms from UTCCR).
What are the proposals relating to consumer contracts?
What are the pros and cons of these suggestions? On balance, are they justifiable?
What are the proposals relating to business-to-business contracts? In particular, note the questions relating to enforcement.
What are the pros and cons of these suggestions? On balance, are they justifiable?
Refer to the policies in play (e.g need for certainty, transparency, meet inequality of bargaining power).

4. 'To avoid frustrating the purpose of the Unfair Terms in Consumer Contracts Regulations 1999, the scope of unreviewable contractual terms, sometimes called core terms, must be narrowly construed.' Discuss

See 12.4.6.

This question invites you to address the jurisdictional question raised by UTCCR. The sub-questions you should consider are:

What terms are reviewable under UTCCR? What terms are not reviewable? You must cite chapter and verse here.
What is the scope of unreviewable terms? In what circumstances might they become reviewable?
Why should certain terms be identified as unreviewable? Why must their scope be narrow? Discuss this in the light of the purposes of UTCCR and the effect of invalidity. You must refer to the discussion in Director General of Fair Trading v. First National Bank.
What do the unreviewable terms tell us about the nature of the unfairness targeted by UTCCR (procedural or substantive or both, note the controversy here)?

5. What amounts to 'unfairness' under the Unfair Terms in Consumer Contracts Regulations 1999?

See 12.6.3.2 and diagram 12I.

This question invites you to discuss the meaning of unfairness under UTCCR. The sub-questions you should consider are:

What is the general test of unfairness (cite chapter and verse)?
What do the components of good faith and significant imbalance mean (note the differences of opinion over this, what's at stake?)?
What guidance can be gleaned from the parent EU Directive?
What guidance can be gleaned from the 'grey list' in schedule 2?
The over-arching question is whether procedural unfairness is necessary to amount to unfairness under UTCCR, consistently with the orthodox view of the legitimate sphere of legal control, or more unusually, unfairness can consist merely of substantive unfairness? Refer to Director General of Fair Trading v. First National Bank and academic debate on this.

6. Finn, a business, and Gigi, a consumer, each purchase computers, the price payable by six monthly instalments, from Herman, a retailer. Finn and Gigi are handed a document. They do not notice the following terms in very small and feint print:

All implied terms are excluded.
Herman's liability is limited to £200 per customer.
Customers must notify Herman of any complaints within 48 hours of purchase and cannot withhold any monthly payments for whatever reason.

Advise Finn and Gigi who find out a week later that the computers are seriously defective and practically useless.

F and G will want to argue that they are not bound by these terms. How can they do that?

Is the unsigned document incorporated? What further facts would you need to know to answer this question?
If properly incorporated, do the terms cover the situation in question? If so, F and G must continue paying the instalments and may not recover any damages as H may not have committed a breach. Moreover, they do not complain in time.
Is there any ground for direct challenge of these terms under UCTA or UTCCR? Note that different legislation may apply depending on whether the complainant is a consumer or not.
What parts of UCTA and UTCCR apply to i), ii) and iii)? With what effect?

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Oxford University Press, Online Resource Centre, Chapter 12.