Liability provisions found unreasonable under UCTA

SAINT GOBAIN BUILDING DISTRIBUTION (t/a INTERNATIONAL DECORATIVE SURFACES) v HILLMEAD [2015]

Certain liability provisions in a supplier’s standard terms and conditions were found to be unreasonable under the Unfair Contract Terms Act 1977 (UCTA). This was the case even though the buyer had a remedy of a replacement of the defective goods or could claim financial compensation up to the invoice value of the goods.

Facts:

UCTA:

Any provisions in a supplier's standard terms which seek to exclude or restrict liability are enforceable only to the extent that they satisfy the ‘reasonableness test’ under UCTA. To pass the reasonableness test, a contract term must have been "... a fair and reasonable one to be included having regard to the circumstances which were, or ought reasonably to have been, known to or in the contemplation of the parties when the contract was made”. UCTA provides various guidelines to assist a Court in making this assessment. 

If a clause fails the UCTA reasonableness test, it will have no effect and the Court will effectively strike it through; it will not re-write the offending exclusion or limitation (although it may, in limited cases, strike out individual parts of exclusion and limitation clauses).

Decision:

Points to note:

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