GCSE Law - Consumer Rights and Responsibilities - Chapter 18

Notes written up detailing Chapter 18 of 'OCR Law for GCSE', Unit 4 - Consumer Rights and Responsibilities.

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18.1 Reasons for regulating unfair contract terms
Exclusion clauses deter liability for breaching a contract;
This can mean that:
Businesses can become unscrupulous;
They can exploit consumers;
And they can stop them from receiving a remedy.
18.2. Controls developed by the courts
Judges recognised that ECs can be unfair and thus they gave strict rules;
Inclusion of a clause means it is incorporated in a contract.
18.2.1. Signed agreement
There must be a signed agreement for the parties to be bound by a contract;
o L'Estrange v Graucob (1934) ­ an exclusion clause excluding liability for defective goods was ruled
justifiable when a woman bought a vending machine, having signed but not read the agreement,
then found it was defective and tried to sue. Therefore, she was unsuccessful.
18.2.2. Knowledge of the existence of the clause when the contract is formed
There must be pre-contracting knowledge by the consumer of the exclusion clause;
o Olley v Marlborough Court Hotel (1949) ­ an exclusion clause was proved invalid as there was no
knowledge prior to contracting that any articles lost or stolen were not of the hotel's liability due to
the EC being situated in the hotel room. When the keys to a couple's room were stolen from the
desk, they sued for the loss of an article but were unsuccessful for this reason.
Sometimes people contract on the same terms regularly. If this is the case, you may not get a remedy unless
you can genuinely show that you were unaware of the exclusion clause;
o McCutcheon v David MacBrayne Ltd (1964) ­ an exclusion clause was ruled invalid as there was no
knowledge of it prior to the agreement when a regularly contracting man's cousin acted on his behalf
in taking his car on a ferry. He neither read nor signed a ticked detailing the EC, which the man had
sometimes received, and when the ferry sank along with the car, he successfully sued as there was
no consistent course of action.
18.2.3. Doing enough to make the other party aware of the exclusion clause
Businesses must make the consumer aware of the existence of an exclusion clause;
It's hard to tell how far they must go;
o Parker v South Eastern Railway Co (1877) ­ an exclusion clause was ruled invalid as Parker, whom had
left his luggage in a cloakroom, had not been asked to read or sign the ticket he was given.
Consequently, he received a remedy for the theft of his luggage;
o Chapleton v Barry Urban District Council (1940) ­ a consumer hired a deckchair and was given two
tickets detailing a clause excluding liability for injuries sustained by the deckchairs. His deckchair
collapsed and he was injured. The court ruled the EC invalid as the consumer had not been asked to
read or sign the agreement and thus there was an insufficient attempt to make him aware of it.
o Dillon v Baltic Shipping Co Ltd (1991) ­ Here, the court held that the EC was invalid because there was
insufficient notice given to the woman, who sustained injuries when a ship sank, about the EC
avoiding liability.

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Thornton v Shoe Lane Parking Ltd (1971) ­ an exclusion clause made to avoid liability for injuries
caused in a car park was ruled invalid as there was an insufficient effort to make the consumer aware
and there was no chance of negotiation before the agreement as the terms were inside the car park.
18.2.4.…read more

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The consumer does not make the contract in the course of a business;
The other party does make the contract in the course of a business;
The goods passing under the contract are of a type ordinarily supplied for private use or
18.4.3.…read more

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However, the Act still has limitations:
It does not cover all ECs;
It is mainly restricted to ECs;
It ignores a lot of unfair terms that may be found in contracts;
In these senses it is perhaps limited in its scope and application.
18.4.7 The Unfair Terms in Consumer Contracts Regulations 1999
These regulations were introduced to comply with an EU directive.…read more

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Consumer groups that may have wished to police contracts have no power under the regulations, so a
significant degree of help that the consumer may have had is not available to them.
Three differences between the Unfair Contract Terms Act 1977 and the Unfair Terms in Consumer Contracts
Regulations 1999:
1. They define `consumer' and `supplier'/'seller' differently;
2. The Unfair Terms in Consumer Contracts Regulations deals with only consumer contracts, not inter-business
3. It also deals with terms other than just exclusion clauses.…read more


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