Control of exemption clauses — common mistakes

In problem questions, always check the timing. A classic exam scenario involves a notice containing an exemption clause seen only after the contract is made (e.g., on a hotel room door or on the back of a ticket issued after payment). This is a failure of incorporation by notice, as per Thornton v Shoe Lane Parking.

When analysing a clause, actively look for ambiguous words. Applying the contra proferentem rule to a specific word in a scenario demonstrates a high level of understanding and is a key skill for earning top marks.

The first step in any problem question on exemption clauses is to identify the parties. Are they two businesses? If so, apply UCTA 1977. Is it a trader and a consumer? If so, you must use the Consumer Rights Act 2015. Applying the wrong statute is a fundamental error.

Do not just state that the reasonableness test applies. To score well, you must apply the specific guidelines from Schedule 2 and principles from cases like George Mitchell to the facts of the problem scenario, arguing why the clause might or might not be considered reasonable.

The 'fairness test' under the CRA is considered more consumer-friendly than UCTA's 'reasonableness test'. When answering a question, refer to the concepts of 'good faith' and 'significant imbalance' to show you understand the specific requirements of the CRA 2015.

No. Signing a contract means the terms are incorporated (L'Estrange v Graucob), but this is only the first step. The clause must still be interpreted by the courts (construction) and, most importantly, it must comply with statutory controls. If it is a B2B contract, the clause must satisfy the requirements of UCTA 1977, such as the reasonableness test. If it is a B2C contract, it must pass the fairness test under the CRA 2015.

No, they are distinct tests. The UCTA 'reasonableness' test focuses on whether the term was fair to include at the time the contract was made, considering factors like bargaining power. The CRA 'fairness' test is broader, asking if the term causes a 'significant imbalance' in rights, contrary to 'good faith'. The fairness test is generally seen as more protective of the consumer than the reasonableness test is for a business.

Yes, but it is heavily controlled. In a B2B contract, a clause excluding liability for breach is subject to the UCTA reasonableness test. In a B2C contract, such a clause is subject to the CRA fairness test and is very likely to be found unfair if it denies the consumer a proper remedy. Crucially, liability for certain things cannot be excluded at all, such as for death or personal injury caused by negligence (under both Acts) or for goods not being of satisfactory quality in a consumer contract (under the CRA).