Businesses excluding their liability under contract

In certain contractual situations a business can exclude and or limit itself from suit by inserting a limitation and or exclusion clause. However, this will bring into play the provisions of the Unfair Contract terms Act 1977 (‘UCTA’).

The first consideration that a business must have in mind before drafting and implementing a limitation or exclusion clause is whether the contract will be one of business to business or business to consumer. This is because UCTA will attach a greater degree of protection to the consumer than the business, the practical effect of which is that certain terms which maybe fine in business to business contracts, may not necessarily be allowed in business to consumer contracts.

For example a clause in a contract which seeks to exclude liability from the seller which would otherwise be owed to the buyer under section 14(2) of the Sale of Goods Act 1979 will be void if placed in a business to consumer contract, but may (provided that the clause is reasonable) be lawful in a business to business contract.

If you are a business and you are seeking to exclude your liability under a contract instruct our drafting department.

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