Chapter 13 Self-test questions

. Prior to the enactment of the Unfair Contract Terms Act 1977, how did the courts seek to regulate unreasonable exclusion clauses? Select all that apply..

Indirectly using good faith principles.

Indirectly, via a particularly restrictive interpretation of exclusion clauses

Indirectly, by use of the contra proferentem principle and at times creating an ambiguity in order to be able to apply the principle

Indirectly, via rules relating to the incorporation of exclusion clauses

. Has the "old intellectual baggage of 'legal' interpretation" (per Lord Hoffmann, in Investors Compensation Scheme Ltd v. West Bromwich Building Society [1998] 1 WLR 896, at 912), in particular the use of artificial rules for the interpretation of exclusion clauses, been discarded?

Yes – the cases post-Investors Compensation Scheme provide clear evidence of a more relaxed approach to the interpretation of exclusion clauses which has resulted in the overruling of all previous precedents

No – the courts continued to apply the old rules, such as the Canada Steamship test, in exactly the same way as they did prior to Lord Hoffmann's judgment in Investors Compensation Scheme

Not entirely – this is clearly the approach that has the support of the Supreme Court in its more recent pronouncement in the Triple Point case but not all of the old authorities have been overruled and so it cannot be said that the process of departing from the old approach is complete.

. The Unfair Contract Terms Act (UCTA) 1977 declares a minority of types of exclusion clause wholly void and subjects the majority to a test of reasonableness. Which of the following types of clause would fall into the former category?

Clauses claiming entitlement to render a substantially different performance from that reasonably expected

Clauses excluding liability for loss or damage to property caused by negligence

Clauses restricting liability for causing death or personal injury through negligence

Clauses claiming entitlement to render no performance at all in respect of all or part of the contract

. The doctrine of fundamental breach caused a number of difficulties in the 1960s and 1970s, when courts sometimes used the device to control unreasonable exclusion clauses. In Harbutt's Plasticine Ltd v. Wayne Tank and Pump Co Ltd [1970] 1 QB 447, Lord Denning MR held the doctrine to entail, as a matter of law, that no party in fundamental breach could rely on an exclusion or limitation clause to escape from liability for the breach. Which of the following statements best describes the current state of the law in relation to fundamental breach?

The doctrine of fundamental breach is a rule of law, not a rule of construction

The doctrine of fundamental breach, as stated by Lord Denning, has been overruled and is no longer good law

The doctrine of fundamental breach, as stated by Lord Denning, remains good law

In the event of fundamental breach, the court will presume that the exclusion or limitation clause does not apply to a fundamental breach

. In relation to the 'reasonableness' test (section 11) of the Unfair Contract Terms Act 1977, the onus of proving that the clause is unreasonable is placed on the party challenging the reasonableness of the term. True or false?

True

False

. SmallBucks Ltd entered into a contract with Zippy & Co. Although the parties negotiated about the price, the rest of the terms are to be found in standard terms which Zippy & Co habitually use in their contracts with customers. The terms were drafted by a trade association, of which Zippy & Co is a member. SmallBucks Ltd allege that Zippy & Co is in serious breach of contract. Zippy & Co rely on an exclusion clause in the contract to defeat the claim. Smallbucks Ltd claim that not all of the terms are written down and that there are various terms which it alleges were agreed orally on which it wishes to rely. Which of the following factors would be relevant in deciding whether or not this case falls within s 3(1) of the Unfair Contract Terms Act? Select all that apply.

Whether SmallBucks Ltd is dealing as a consumer

Whether or not the exclusion clause is reasonable

The fact that the terms were drafted by a trade association, not by Zippy & Co.

The extent to which the terms were used by Zippy & Co in dealings with their customers

Whether the contract contained any orally agreed terms

. Which of the following did the court decide in the case George Mitchell Ltd v. Finney Lock Seeds Ltd [1983] 2 AC 803?

The most important of the considerations to be taken into account in ascertaining the 'reasonableness' of a specific exclusion clause is the availability of insurance

Appellate courts should be extremely reluctant to upset the findings of the trial judge on the matter of 'reasonableness'

The reasonableness test should be less demanding where limitation clauses are concerned

The unreasonable parts of an exclusion clause should not be severed so as to save the remainder

. In Phillips Products Ltd v. Hyland [1987] 1 WLR 659, it was suggested that "a transfer of liability from A to B necessarily and inevitably involves the exclusion of liability as far as A is concerned", thereby extending the remit of the Unfair Contract Terms Act 1977 quite significantly. Thompson v. T Lohan (Plant Hire) Ltd [1987] 1 WLR 649, however, seems to make a move in the opposite direction. In which of the following ways?

In Thompson, a transfer of liability was said to have nothing to do with excluding or restricting that liability

In Thompson, a transfer of liability was said always to fall outside the Unfair Contract Terms Act 1977

In Thompson, a transfer of liability was said to equate to an exclusion of liability only insofar as it prejudiced the victim's chances of recovery

In Thompson, a transfer of liability was considered to be a mere description or sharing of contractual obligations

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