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Unfair Contract Terms

Sometimes contract terms are considered to be unfair to one of the contracting parties
that the legislature and courts have been prepared to intervene to prevent miscarraige
of justice. This has tended to arise in the context of exemption clauses and these are
controlled both by the common law and by the Unfair Terms Contract Act 1977.
Common law controls:
Judges have shown disapproval of such exemption clauses as they are often used by
powerful contracting parties to impose harsh terms on smaller parties.
Two ways to regulate such clauses:
First by looking at if that clause has actually been incorporated in the contract, in which
case it is for the party seeking to rely on that clause to prove incorporation.
Secondly they may question whether the words used in the clause can be interpreted as
covering the alleged breach.
Should be brought to the contracting parties’ attention before or at the time the contract
is being made. If the term is not brought to their attention it cannot be said that they had
accepted the term. Mirror Image Rule
Olley v Marlborough Court:
Claimant booked into a hotel and the contract was made at the reception desk and
there was no mention of any such exclusion clause. However, on the back of the room’s
door there was a notice sought to exclude liability of the hotel in case of any lost, stolen
or damaged property. And the claimant had her fur coat stolen.
Held: notice was ineffective as the contract had already been made by the time
claimant had seen the notice. It did not form part of the contract.

Thornton v Shoe lane parking


Claimant injured in car parking partly due to defendant's negligence.
Claimant was given a car parking ticket after putting money into the machine, which
said contract of parking was subject to terms and conditions displayed on the inside of
the car park. One of the terms excluded liability incase of any personal injury
Held: the machine itself constituted the offer. The acceptance was by putting money
into the machine. The ticket was dispensed after the acceptance took place and
therefore the clause was not incorporated into the contract.

But where there is a written contract which is signed, a party is bound by all the terms
in the contract even if they weren't aware of those terms or haven't read those terms.
L’estrange v Graucob
C purchased a cigarette vending machine. Signed an order form which had exclusion
clause. The vending machine didn't work and claimant sought to reject it unders Sale
and Goods Act for not being of merchantable quality.
Held: claim was unsuccessful as by signing the form she was bound by all the terms
contained in it irrespective of the fact whether she read or not.

Curtis V Chemical cleaning


C took wedding dress to the cleaners, signed a form which included an exclusion clause
for any damage. The defendant told her it excluded liability for any damage to beads.
The dress was returned badly stained.
Held: defendant could not rely on the clause because the assistant misinterpreted the
effect of it even though the C signed the form.
UCTA 1977( Statutory Control)
Basic purpose of this act is to control the use of clauses excluding or limiting liability for
breach of contracts especially where one party is a consumer.
Mainly provisions apply where one party is a consumer and the other is a business.