The Unfair Contract Terms Act 1977

Topics: Contract, Unfair Contract Terms Act 1977, Sale of Goods Act 1979 Pages: 9 (3573 words) Published: June 19, 2013
In the present essay the problem covered will be The Unfair Contract Terms Act 1977, known as UCTA and the Unfair Terms in Consumer Contract Regulations 1999, known as UTCCR. As things stand at present, consumers are faced with two pieces of legislation in a vital area of contracts. The main areas analysed will consist of a historical background of the Act and the Regulations, a comparison between them but also the inconsistencies and overlaps which exist regarding these two layers of complex regulation. After this thorough analysis is complete a conclusion will be drawn on the bases of what was covered.

Situation in UK
Legislation to combat unfair terms was first passed in the 19th century. Until 1994 the controls centred on clauses which exclude or limit liability; the principal Act is now The Unfair Contract Terms Act 1977 (UCTA). However, in 1993 the European Council of Ministers passed a Directive on Unfair Terms on Consumer Contracts[1] which applies (with limited exceptions) to unfair terms of any type in consumer contracts. The Directive was implemented in the UK by Regulations made under European Communities Act 1972; these have now been superseded by the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCR)[2]. The Regulations did not amend or repeal UCTA; they provide an additional set of controls. The resulting structure is complex and proposals have been made to simplify it by combining the two sets of rules into a single one, modified legislative scheme[3]. The Regulations operates side by side with UCTA, so that is possible for a term to be valid under the Regulations and not the Act, and conversely. Or, to put the same point in another way, a party wishing to rely on a contract term will have to satisfy to both requirements of both sets of rules. The scope of the Regulations, however, differs significantly from that of the Act, so that often only one set of rules will apply[4]. If the term in question is one that purports to exclude or restrict the liability of one of the parties, it is likely to be subject to UCTA. UCTA applies both to consumer contracts and to contracts between businesses[5]. It may have the effect that the exclusion or restriction of liability is completely ineffective; or it may invalidate the term unless “satisfies the requirement of reasonableness”[6]. If the term is in a consumer contract it will normally be subject to UTCCR. UTCCR can apply to almost any type of term that has not been “individually negotiated”, and it will invalidate the term if it is “unfair.” However, UTCCR do not apply to “core” terms involving the subject matter or the price of the goods and services[7].

Historical background
The enactment of the Unfair Contract Terms Act 1977 introduced a major addition to the mechanisms for controlling exemption clauses. The power to override exemption clauses found to be unreasonable has been introduced in the case of implied terms in the sale of goods by the Supply of Goods (Implied Terms) Act 1973. The 1977 Act, however, applies more extensive controls to a wide range of categories of contract, so that, for contracts within the scope of the Act, the courts for the first time had a general and direct means of control of the use of exemption clauses. The application of UCTA may render an exemption clause either totally unenforceable, or unenforceable unless shown to be reasonable[8]. The EC Directive on Unfair Terms in Consumer Contracts (93/13/EC) was the first major European Intervention into the heartland of domestic contract law. The Directive was initially implemented into English Law by the Unfair Terms in Consumer Contracts Regulations 1994 (SI No 1994/3159). The Regulations came into force on 1 July 1995 but were revoked and replaced by the Unfair Terms in Consumer Contracts Regulations which came into effect on 1 October 1999.

Overlaps and differences between UCTA 1977 and UTCCR 1999
The drafting of UCTA is not entirely...
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