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The Unfair Contract Terms Act (referred to as UCTA by

business and legal insiders) is a body of law designed to


primarily protect consumers who may be prejudiced by the
weaker bargaining positions they occupy in most consumer
transactions. More generally, the preamble to UCTA reads as
follows: An Act to impose further limits on the extent to which
civil liability for breach of contract, or for negligence or other
breach of duty, can be avoided by means of contract terms
and otherwise. The full text of UCTA may be accessed here.
Negligence liability Section 2 of UCTA
UCTA prohibits a person from using a contract term or notice
to exclude his own liability for negligent acts causing death or
personal injury on another. For instance, an amusement park
operator is unable to rely on a signboard disclaiming liability
for rollercoaster failure leading to personal harm to the visitor.
In contrast, for loss or damage beyond death or personal
injury, exclusion clauses are valid insofar as they are
reasonable. UCTA itself defines reasonableness see below
at Glossary.
Contractual liability Section 3 of UCTA
In the case of a consumer dealing with a business entity, if the
transaction is entered into using the latters standard form (for
instance, when you sign up with a telco on their standard
contract), section 3 applies. This section disallows the
business from using its standard contractual terms to
1. Exclude its own liability for breaches of terms;
2. Excluding or limiting its own liability for breaches of
terms, and
3. Relying on a term to render a different kind of service
from that which was reasonably expected of him, or
not service at all,
unless the standard contractual term is reasonable. Once
again, reasonableness rears its amorphous head!
Indemnity clauses Section 4 of UCTA
Additionally, section 4 applies to protect consumers from
being made to indemnify another person in respect of liability
that may be incurred by the other for negligence or breach of

contract, except in so far as the contract term satisfies the


requirement of reasonableness. For instance, this could apply
in the case of a loan guarantee whether an indemnity clause
is reasonable would depend on the usual banking practice in
the industry.
Consumer products Section 5 of UCTA
Consumer products are generally products used for private
consumption, as opposed to business use. For instance, a
bottle of Yakult is a consumer product.
The manufacturer or retailer cannot rely on a term or notice
(usually printed on the product itself) to exclude liability for
product defect or negligent manufacturing or distribution.
Sale and hire-purchase Section 6 of UCTA
Various liabilities for breach of obligation in a sale and hirepurchase contract cannot be excluded or restricted. For more
details, do refer to section 6 of UCTA. These obligations
include, in general, implied assurances that the seller or
owner that he has good title to the goods, and that the goods
in question are of good quality, are usable for their general
purpose, and that they conform to their marketing
descriptions.
Goods that require transfer of possession or ownership
Section 7 of UCTA
Similarly, section 7 of UCTA imposes restrictions on the use of
contractual clauses to exclude or limit liability in certain
situations concerning contracts transferring possession or
ownership. Similar to section 6, section 7 is designed to
protect the party from unreasonable terms that take away that
partys rights, such as implied assurances that the seller or
owner that he has good title to the goods, that the goods in
question are of good quality, are usable for their general
purpose, and that they conform to their marketing
descriptions.
Special contracts
Certain contracts, such as contracts for insurance, do not fall
within the purview of the UCTA. These limitations are outlined
in the First Schedule of UCTA.