“The Customer agrees and acknowledges that it hires the Vehicle for use in its business and that no condition, warranty or representation of any kind is or has been given by or on behalf of the Company in respect of the Vehicle. The Company shall have no liability for selection, inspection or any warranty about the quality, fitness, specifications or description of the Vehicle and the Customer agrees that all such representations, conditions and warranties whether express or implied by law are excluded. Notwithstanding the foregoing provisions of this clause, nothing herein shall afford the Company a wider exclusion of liability for death or personal injury than the Company may effectively exclude having regard to the provisions of theUnfair Contract Terms Act 1977 . The Customer acknowledges that the manufacturer of the Vehicle is not the agent of the Company and the Company shall not be bound by any representation or warranty made by or on behalf of the Vehicle manufacturer.”
“(2) Where the creditor bails or hires goods under a relevant hire-purchase agreement in the course of a business, there is an implied term that the goods supplied under the agreement are of satisfactory quality. (2A) For the purposes of this Act goods are of satisfactory quality if they meet the standard that a reasonable person would regard as satisfactory, taking account of any description of the goods, the price (if relevant) and all other relevant circumstances.”
“Liability for breach of the obligation arising from – …. (b) section..10…of the 1973 Act… cannot be excluded or restricted by reference to a contract term except in so far as the term satisfies the requirement of reasonableness”
“The matters to which regard is to be had in particular for the purposes of sections 6(1A), 7(1A) and (4), 20 and 21 are any of the following which appear to be relevant— (a) the strength of the bargaining positions of the parties relative to each other, taking into account (among other things) alternative means by which the customer's requirements could have been met; (b) whether the customer received an inducement to agree to the term, or in accepting it had an opportunity of entering into a similar contract with other persons, but without having to accept a similar term; (c) whether the customer knew or ought reasonably to have known of the existence and extent of the term (having regard, among other things, to any custom of the trade and any previous course of dealing between the parties); (d) where the term excludes or restricts any relevant liability if some condition is not complied with, whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable; (e) whether the goods were manufactured, processed or adapted to the special order of the customer.”
“As against that party, the other cannot by reference to any contract term- (a) when himself in breach of contract, exclude or restrict any liability of his in respect of the breach; or (b) claim to be entitled – (i) to render a contractual performance substantially different from that which was reasonably expected of him, or (ii) in respect of the whole or any part of his contractual obligations, to render no performance at all, except in so far as (in any of the cases mentioned above in this subsection) the contract term satisfied the requirement of reasonableness.”
“This Act applies to consumer contracts and those based on standard terms and enables exception clauses to be applied with regard to what is just and reasonable, It is significant that Parliament refrained from legislating over the whole field of contract. After this Act, in commercial matters generally, when the parties are not of unequal bargaining power, and when risks are normally borne by insurance, not only is the case for judicial intervention undemonstrated, but there is everything to be said, and this seems to have been Parliament’s intention, for leaving the parties free to apportion the risks as they think fit and for respecting their decisions.”
“…hire purchase agreements will almost invariably be made on the finance company’s standard terms of business. Consideration of the sch. 2 factors does not preclude consideration of other relevant circumstances. Conversely, where the court is not obliged to take the factors into account, they will often nevertheless be pertinent. …Insofar as it may be necessary to decide the matter…it seems to me that in any case where it is sought to exclude liability for obligations implied into a hire purchase agreement the court must have regard to the sch. 2 guidelines… I do have regard to them but do not derive much assistance from them on the facts of the present case. ”
“The natural meaning of the clause is that there is to be no liability for any express representation or warranty. It amounts to a total exclusion of all liability. That natural meaning is offensive to reason, as the Vice-Chancellor said in [Purnell]…Any clause with that meaning is, therefore, prima facie unenforceable. …… …it is true that [Purnell] did deal with an express or implied warranty made contemporaneously with the contract. It is also true that the present case deals with an exclusion of implied warranties. Nevertheless, the language used in [Purnell] applies in terms to implied warranties of the kind relevant in the present case.”
“…More to the point, supposing the parties had contemplated the quality of the equipment supplied to the defendant would have been as completely useless, as it in fact turned out to be, would it have been reasonable for the [finance company] to say: “We accept we are the owners in law. We accept we have undertaken to lease this agreement to you over quite a long fixed term, nevertheless, we can reasonably say to you however useless and defective the equipment will be from the outset, we can require you to look to the suppliers as the people who sold it to use for your remedy and we can require you to continue paying the rent meanwhile”? I consider it would not be and is not reasonable for the [finance company] to take that position, nor do I think it would be fair. The fact is that the [finance company] were and remain the owners of the goods. They, as well as the [hirer], chose to adopt that route in financing the supply of goods to the defendants. I do not think it is prima facie reasonable for them to say: “That is a mere matter of form. We are entitled in all other respects to disassociate ourselves from any obligations as lessors”
“54…it is reasonable to expect that the contract will make provision for the risk of indirect or consequential loss to fall on one party or the other. In circumstances in which parties of equal bargaining power negotiate a price for the supply of product under an agreement which provides for the person on whom the risk of loss will fall, it seems to me that the court should be very cautious before reaching the conclusion that the agreement which they have reached is not a fair and reasonable one. 55. Where experienced businessmen representing substantial companies of equal bargaining power negotiate an agreement, they may be taken to have had regard to the matters known to them. They should, in my view be taken to be the best judge of the commercial fairness of the agreement which they have made; including the fairness of each of the terms in that agreement. They should be taken to be the best judge on the question whether the terms of the agreement are reasonable. The court should not assume that either is likely to commit his company to an agreement which he thinks is unfair, or which he thinks includes unreasonable terms. Unless satisfied that one party has, in effect, taken unfair advantage of the other – or that a term is so unreasonable that it cannot properly have been understood or considered - the court should not interfere. 56. In the present case the parties did negotiate as to the price. Mr Jessa, on behalf of Watford, secured substantial concessions on price from Mr Broderick. The parties negotiated, also, as to which of them should bear the risk (or the cost of insurance against the risk) of making good the loss of profits, and other indirect or consequential loss, which Watford might suffer if the product failed to perform as intended. Mr Jessa was less successful in obtaining from Mr Broderick the concession which he wanted. The most that he could get was an undertaking that Sanderson would use its best endeavours to allocate appropriate resources to ensuring that the product performed according to specification. But, for the reasons which I have sought to explain, that was worth something to Watford; and Mr Jessa decided that he would be content with what he could get. In my view it is impossible to hold, in the circumstances of the present case, that Sanderson took unfair advantage of Watford; or that Watford, through Mr Jessa, did not properly understand and consider the effect of the term excluding indirect loss. 57. It follows that I would hold that the term excluding indirect loss, applicable in the circumstances which I have described, was a fair and reasonable one to include in the contract.”
“For these reasons I think the judge reached the wrong conclusion in this case. If necessary I would say he was plainly wrong. I am pleased to reach this decision. The 1977 Act obviously plays a very important role in protecting vulnerable consumers from the effects of draconian contract terms. But I am less enthusiastic about its intrusion into contracts between commercial parties of equal bargaining strength, who should generally be considered capable of being able to make contracts of their choosing and expect to be bound by their terms. Here the transaction includes carriage of goods by sea and insurance. These spheres of commercial activity standing on their own are excluded from the Act (see Schedule 1 paras. 1a (insurance) and 2c and 3 (carriage of goods by ship). In this case the element of road transport was sufficient to render the transaction subject to the Act, but the mixed nature of the contract of carriage emphasises the interest of the freight forwarder in having a time limitation which is applicable across the spectrum of his obligations.”
“409… in relation to price, the parties were on at least an equal footing (indeed Balmoral may have had slightly the upper hand), but on terms they were not. Borealis was only prepared to supply borecene, which became, as Borealis no doubt wished, Balmoral’s primary raw material, on its terms. Other suppliers, whether of borecene or ZN material were also likely to be willing to supply only on their similar standard terms….”
“421. When the contracts were made Borealis knew that Balmoral was buying borecene for the purpose of making oil tanks and that it was relying on Borealis to supply a polymer capable of being used to make consistently satisfactory tanks. It was the assumption of both sides that it was so capable. The supply of a product which, because of a latent defect…made the manufacture of consistently satisfactory tanks impossible would confound those assumptions. In those circumstances a blanket exclusion of any liability whatever is prima facie unreasonable... 422. A determination of the reasonableness of a contractual exclusion requires consideration of whether the allocation of risk effected by the exclusion is appropriate. I have not been persuaded that requiring Balmoral to bear the entire risk of a latent defect in Borealis’ product is an appropriate allocation of risk. The Sale of Goods Act itself recognises that, all other things being equal, it should be the seller who bears the responsibility. Borealis has extensive insurance against just such a risk. Whilst product recall insurance would probably have been available to Balmoral, albeit expensively, Balmoral did not have such insurance. The evidence does not establish that product recall insurance would have been normal for someone in Balmoral’s position. 423. But commercial parties habitually make agreements amongst themselves that allocate risk; and the Court should not lightly treat such agreements as unreasonable. The present case is not, however, one in which the contracts made were the result of a serious negotiation as to the incidence of risk: cf the Watford case where that was exactly what took place. Borealis’ terms were presented on a take-it-or leave it basis and Balmoral’s scope for going elsewhere on any better terms was very limited (on the evidence before me to Matrix and, even with them, obtaining any substantial sum would depend on proving negligence). Whilst Borealis UK’s terms were standard in the trade they are not the product of any agreed process of negotiation between representatives of sellers and buyers.”
“More widely, it is certainly right, as the commentators have noted, that the trend in the UCTA cases decided in recent years has been towards upholding terms freely agreed, particularly if the other party could have contracted elsewhere and has, or was warned to obtain, effective insurance cover…”
“…even where UCTA is applicable, at least in the case of commercial contracts between parties of broadly equal bargaining power, considerations of party autonomy and freedom of contract remain potent.”
“16. The more recent authorities on UCTA in the Court of Appeal show a marked reluctance to interfere, by concluding that an exclusion clause has not been shown to satisfy the requirement of reasonableness, in substantial commercial transactions entered into by parties of equal bargaining strength...”
“(i) Last Bus was a substantial commercial party well able to acquire the Tourismos, if it so wished, without contracting on a hire purchase basis with Dawson. There is no suggestion, or basis for suggesting, that Dawson, in effect, took advantage of Last Bus, or that Clause 5(b) is so unreasonable that it might have occurred to Dawson that in signing up to it, Last Bus must have not properly understood or considered it; (ii) if Last Bus was not content with Dawson’s exclusionary terms, it was in a position to secure such contractual assurances as to quality as EvoBus was willing to offer, either alongside the use of hire purchase via Dawson (or another finance house), or if necessary by buying directly; and (iii) there was a long and consistent prior course of dealing between Last Bus and Dawson, in which Last Bus had freely agreed to, and never once raised objection to or concern about, Clause 5(b) (or its materially equivalent predecessors).”
“[those] factors are sufficient to overwhelm the one factor that, so far as it goes and other things being equal points away from the reasonableness of the term, namely that Last Bus did not have the option to contract with anyone else for the hire purchase finance on terms that would not have involved an equivalent exclusion of liability.”
“Bearing in mind the approach taken in cases between substantial commercial parties of equal bargaining power…there is no real prospect of Last Bus resisting Dawson’s primary argument. In my judgment, it is compelling and sufficient. There is no need for a trial to see that Clause 5(b) satisfied the requirement of reasonableness. Upon indisputable matters of fact, that in my view is bound to be the finding in this case; and there is no reason, let alone a compelling reason, for keeping Dawson in this Claim if there is no realistic prospect of Last Bus avoiding that finding.”