contract law Acts

The legal act summary below is supplied by Law Teacher as a free information resource to help you with your studies.

Limitation Act 1980

Limitation periods enforce time limits within which a party must bring a claim, or give notice of a claim to the other party[1]. They are enacted by statute, predominantly the Limitation Act 1980 (LA)[2].

It was ratified due to widespread opinion that it was contrary to public policy for persons to be continuously exposed to litigation for wrongful acts[3]. When substantial time had passed following a wrongful act certain matters may become subject to change such as witnesses’ recollections fading, documentary evidence available to properly judge the case unlikely to be available or in certain cases even exist[4]. These factors could avoid proper justice being served[5].

There are various limitation periods for different types of actions and if limitation has passed, the claim will be bound by statute and the claimant may be prohibited from bringing a claim against the purported wrongdoer[6]. If a claim is brought out of time, the defendant will be able to plead limitation as a defence and the claimant will have the burden of proving that the cause of action arose within the relevant statutory timeframe[7].

Time starts from different dates conditional upon the cause of action, see below. The commencement of proceedings (i.e. when the claim form is received at Court) stops time running for that cause of action[8]. As a result, when disputing parties are in settlement negotiations and the limitation expiry date is near, the claimant will commence proceedings which are then put on hold to allow discussions to continue which protects the claimant's right to sue[9]. Whilst such protective proceedings can be revised later with the court's consent, such permission will not encompass a new cause of action to be included in the proceedings[10].The LA consists of three parts; Part 1 enacts periods of limitation, Part 2 deals with the extension of these periods whilst Part 3 contains general provisions[11]. The key provisions on time limits in the LA are set out in Appendix 1.

The aim of the LA was to consolidate the Acts of limitation from 1939 to 1980[12]. This was due to, as Dov Ohrenstein states, ‘a flurry of legislation since 1939 has attempted to remove some of the harshness of the original legislation and, combined with developments in the law of negligence, has added complexity to the original relatively simple rules’[13].

The LA broadened the Limitation Act 1939 i.e. it was extended from 34 to 41 sections and was intended to bring the law up to date with demographic changes in society. Some of the relevant changes the LA made to the law are highlighted below:

- Sections 11 and 14: It provided greater clarity in relation to the ‘discoverability test’ for personal injury claims with the inclusion of the ‘date of knowledge’[14] which is defined at section 14(1)[15].

- Sections 28 and 38: This section changed the approach to limitation rules in a case where the Claimant is under a disability[16]. It provided the Court with jurisdiction to extend the normal limitation rules where the claimant was under a disability at the point when the cause of action accrued[17]. Section 38 outlines the circumstances in which a person is deemed to be under a disability i.e. if they are an infant or of unsound mound[18].

- Section 33: This section provided the Court with further powers to 'disapply' the normal time-limits on actions in respect of personal injury and death[19].

- Section 35: This related to any new claim made in the course of any action[20]. Its effect was to extend the categories of cases in which new claims, by way of set-off or counterclaim, can be brought after the expiry of the limitation period[21]. However, section 35(4) and 35(5) provide that such new claims are subject to certain conditions[22].

The Act has been subject to a number of proposed reforms since its enactment years and many consider it to be unnecessarily complicated[23]. In a report in 2001, the Law Commission felt the LA suffered from a number of problems[24]. They argue that the LA ‘makes different provision in respect of different causes of action. It is not always clear which category a cause of action falls into, and thus how it should be treated for limitation purposes’[25]. Instead, the Law Commission recommended that there be a universal regime which consists of a primary limitation period of three years starting from the date of the Claimant’s knowledge or assumed knowledge, followed by a long-stop limitation of ten years, starting from the date of accrual of the cause of action or from the date of the act/omission[26]. Whilst the proposals have not yet been actioned, it appears to be a question ‘when’ rather than ‘if’.

Unfair Contract Terms Act 1977

The Unfair Contract Terms Act 1977 (UCTA) governs how far a seller can go in eliminating liability to a business buyer if they breach their sales contract[27]. The Act covers limitation, exemption clauses and indirect clauses that try to cut down liability[28]. It also details that particular exclusion clauses are completely unenforceable and others are valid only if they are reasonable[29]. The Act is divided into three parts – Part 1 relates to England and Wales, Part 2 to Scotland and Part 3 to the UK as a whole[30]. Essentially, the UCTA sets out domestic UK approach, whilst the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCR) implements the 1993 EU Directive[31]. MacDonald states that ‘together they (UCTA and UTCCR) provide a powerful weapon against unfair terms’[32].

The Act was introduced to protect the institution of contract[33]. Scholars saw it as a social institution with a primary purpose to expand and provide the necessary security for exchange agreements that further each party’s interests[34]. The Act also introduced more far-reaching provisions than its predecessors, specifically in relation to exemption clauses[35].

Sections 6 and 7 UCTA set out ways to eliminate implied terms set out in the Sales of Goods Act and Supply of Goods and Services Act against a buyer[36]. These sections highlight that you can only exclude this liability in a sale to another business provided it's reasonable to do so[37].

A seller, when selling goods to another business using their own written standard terms and conditions can exclude other types of liability only if it's reasonable to do so[38]. They cannot eliminate liability for negligence causing death or personal injury and can only exclude liability for other types of loss triggered by negligence where reasonable[39].

Consideration is given to the circumstances known to both parties at the time the contract was made in determining whether it's fair and reasonable to put an exclusion clause into the contract[40]. The Act sets out various guidelines to regulate how reasonable an exclusion clause is. However, the list doesn't cover every scenario[41]. If there is a disagreement, the court may take into account any factors it thinks are applicable[42].

The court will consider the parties’ relative bargaining strengths (taking into account other ways the buyer could get what they require), whether the buyer was given an inducement to agree to the term and whether they could have entered into the same contract with another seller in the absence of that term[43].

Other guidelines that are considered are:

  • Whether the buyer knew or should have known that the term existed and what it protected[44]; and
  • Whether it was reasonably expected that the buyer could comply if the term excluded/restricted liability unless a certain condition was satisfied[45].

The final guideline relates to goods manufactured, processed or adapted to the buyer's special order. If a buyer asks for tailored goods, it's generally reasonable for the seller to discount or limit their liability if the goods are faulty or unfit for purpose.

Contracts with consumers tend to be treated more stringently than contracts where the buyer is a business. The Consumer Rights Act 2015 (and the legislation it amalgamated) governs attempts to limit or exclude liability to consumers and makes specific exclusion clauses invalid.

The Consumer Rights Act 2015 in effect, consolidates the provisions that apply to consumers under the Unfair Contract Terms Act 1977 and the Unfair Terms in Consumer Contracts Regulations 1999. Any clauses in the contract that attempt to reduce or remove these duties in relation to a consumer will be invalid. Also any clause that dismisses or limits the liability of the seller for death of or personal injury to the consumer triggered by the seller's negligence is invalid under section 65[46].

The Act also states that unfair terms in consumer contracts / notices aren't binding on the consumer[47]. Consumer notices are notices not part of the contract and planned to be read by a consumer[48].

A term is considered unfair if it's contrary to good faith and causes a substantial unevenness in the rights and duties of the parties to the disadvantage of the consumer[49].

A term is expected to meet this definition if it confines the consumer's rights or unreasonably increases the responsibilities of the consumer as compared to those of the seller. The Act gives examples of factors that impact fairness, such as the nature of the goods and circumstances in which the contract was made[50].

Part 1 of Schedule 2 of the Act gives many examples of terms which might be seen as unfair[51]. These include terms that:

  • Make the consumer accomplish all their commitments where the supplier doesn't perform theirs[52].
  • Make the consumer pay a excessively high sum if they don't achieve a responsibility under the contract[53].
  • Allow a seller to end an unfixed contract without reasonable notice and without a serious reason[54].
  • Spontaneously lengthen a fixed-term contract if the consumer doesn't object, when the time limit for the consumer to object is early[55].

However, since the Act and the Regulation’s enactment, the Law Commission has reviewed it and made recommendations which are now contained in the Consumer Rights Act 2015; ‘the two laws contain inconsistent and overlapping provisions, using different language and concepts to produce similar but not identical effects. A law that affects ordinary people in their everyday lives had been made unnecessarily complicated and difficult.[56]

Appendix 1

Limitation Act 1980 – Key Provisions

- Section 2, 14A and 14B – Claims for negligence(other than personal injury or death) must be made within six years of the negligent act/omission[57]. The period runs from the date the damage is suffered[58]. Where the claim involves physical damage, the limitation period runs from the date of the damage, not the act which causes damage[59].

- Section 2 – Tort claims (generally, including conversion and trespass) must be made within six years of the date the cause of action accrued[60].

- Section 11 – Claims for personal injury or death must be made within three years of accrual of the negligent act/omission or knowledge[61].

- Sections 2 and 32 – Claims for fraud must be made within six years of the date the cause of action accrued. Time does not begin until the fraud has, or with reasonable diligence would have been, exposed, if the defendant purposely covers any fact relevant to the cause of action[62].

- Section 4A – Claims of libel, slander and malicious falsehood must be made within one year of the cause of action accruing. A fresh cause of action accumulates every time the claimant is slandered[63].

- Section 5 – Contract claims must be brought within six years of the date of breach. The cause of action occurs as soon as the contract is broken. By contrast, in tort, no cause of action arises until all components of duty, breach and damage are present. Unlike tort, the limitation period cannot be prolonged on latent damage grounds[64].

- Section 8 – This relates to contract under seal/deeds where a claim must be made within 12 years of the breach of contract or deed[65].

- Sections 15, 17 and 20 - A claim for the recovery of land, proceeds of sale of land or money secured by a mortgage or charge must be made within 12 years of the right accruing and after that time, the title of the person stops[66].

- Section 19 - A claim for arrears of rent must be made within six years of the date the rent became due[67].

- Section 21(3) - An action for non-fraudulent breach of trust should be made within six years of the date on which the right of action accrued[68].

- Section 22 - An action claiming personal estate of a deceased person must be brought within 12 years of the date the right to receive the share or interest accrued[69].

- Section 10 - An action for a contribution must be made within two years of the right accruing. A contribution here refers to a defendant's entitlement to claim against another party with whom he may be jointly liable for the claimant's loss[70].

- Section 24 - To enforce a judgment it must be brought within six years of the date upon which the judgment became enforceable[71].

Bibliography

Limitation Act 1980

Legislation

- Limitation Act 1980

Online Books/Articles/Websites

- Blackfriars Group Insurance Official Website, ‘The Limitation Act 1980’ < https://www.blackfriarsgroup.com/limitation-act-1980/> Last Accessed: 21/02/106

- Dov Ohrenstein, ‘Limitation Periods:- What’s the limit’ <http://radcliffechambers.com/wp-content/uploads/2010/02/Limitation_seminar_-_Dov_Ohrenstein.pdf> Last Accessed: 27/02/2016

- In Brief Official Website, ‘What is meant by limitation periods under UK law and when will this come into play?’ < http://www.inbrief.co.uk/claim-preparations/civil-claim-limitation-periods.htm> Last Accessed: 21/02/2016.

- Law Commission, ‘Limitation of Actions’, Law Com No 270 < http://www.lawcom.gov.uk/wp-content/uploads/2015/03/lc270_Limitation_of_Actions.pdf> Last Accessed: 27/02/2016

- Money Claims UK Official Website, ‘What is the Limitation Act?’ < https://www.moneyclaimsuk.co.uk/limitation-act.aspx> Last Accessed: 21/02/2016

- Pinsent Masons Official Website, ‘Advice Note: Limitation’ <http://www.pinsentmasons.com/PDF/Limitation.pdf> Last Accessed: 21/02/2016

- The In-House Lawyer Official Website ‘Clarifying the law on limitation periodshttp://www.inhouselawyer.co.uk/index.php/litigation-a-dispute-resolution/7464-clarifying-the-law-on-limitation-periods Last Accessed: 27/02/2016

Unfair Contract Terms Act 1997

Legislation

- Consumer Rights Act 2015

- Unfair Contract Terms Act 1997

Online Books/Articles/Websites

- Christian Law Firm Official Website, ‘Contract Law: Unfair Contract Terms Act 1977’ < http://christianlawfirm.co.uk/blog/?p=541> Last Accessed: 21/02/2016

- Elizabeth MacDonald, ‘Unifying Unfair Terms Legislation’, (2004), 67 MLR 69, Page 69

- Law Commission Official Website, ‘Unfair Terms in Contracts’, Law Com No.298 < http://www.lawcom.gov.uk/wp-content/uploads/2015/03/lc292_Unfair_Terms_In_Contracts_Summary.pdf> Last Accessed: 21/02/2016

- Law Teacher Official Website, ‘Will Unfair Contract Terms Bill improve Law’ < http://www.lawteacher.net/free-law-essays/contract-law/will-unfair-contract-terms-bill-improve-law-contract-law-essay.php> Last Accessed: 21/02/2016

- Mindy Chen-Wishart, ‘Regulating Unfair Terms’, (Hart Publishing, 2015)

- My Lawyer Official Website, ‘Unfair Contract Terms’ < http://www.mylawyer.co.uk/unfair-contract-terms-a-A76062D32725/> Last Accessed: 21/02/2016

- Pinsent Masons Official Website, ‘Advice Note: Limitation’ <http://www.pinsentmasons.com/PDF/Limitation.pdf> Last Accessed: 21/02/2016

- E-Law Resources Official Website, ‘Unfair Contract Terms Act 1977’ < http://www.e-lawresources.co.uk/Unfair-Terms---Regulation-by-statute.php> Last Accessed: 21/02/2016


[1] Money Claims UK Official Website, ‘What is the Limitation Act?’ < https://www.moneyclaimsuk.co.uk/limitation-act.aspx> Last Accessed: 21/02/2016

[2] Pinsent Masons Official Website, ‘Advice Note: Limitation’ <http://www.pinsentmasons.com/PDF/Limitation.pdf> Last Accessed: 21/02/2016

[3] In Brief Official Website, ‘What is meant by limitation periods under UK law and when will this come into play?’ < http://www.inbrief.co.uk/claim-preparations/civil-claim-limitation-periods.htm> Last Accessed: 21/02/2016.

[4] Pinsent Masons Official Website, ‘Advice Note: Limitation’ <http://www.pinsentmasons.com/PDF/Limitation.pdf> Last Accessed: 21/02/2016

[5] Pinsent Masons Official Website, ‘Advice Note: Limitation’ <http://www.pinsentmasons.com/PDF/Limitation.pdf> Last Accessed: 21/02/2016

[6] Money Claims UK Official Website, ‘What is the Limitation Act?’ < https://www.moneyclaimsuk.co.uk/limitation-act.aspx> Last Accessed: 21/02/2016

[7] Pinsent Masons Official Website, ‘Advice Note: Limitation’ <http://www.pinsentmasons.com/PDF/Limitation.pdf> Last Accessed: 21/02/2016

[8] Blackfriars Group Insurance Official Website, ‘The Limitation Act 1980’ < https://www.blackfriarsgroup.com/limitation-act-1980/> Last Accessed: 21/02/106

[9] Pinsent Masons Official Website, ‘Advice Note: Limitation’ <http://www.pinsentmasons.com/PDF/Limitation.pdf> Last Accessed: 21/02/2016

[10] Pinsent Masons Official Website, ‘Advice Note: Limitation’ <http://www.pinsentmasons.com/PDF/Limitation.pdf> Last Accessed: 21/02/2016

[11] Limitation Act 1980

[12] Dov Ohrenstein, ‘Limitation Periods:- What’s the limit’ <http://radcliffechambers.com/wp-content/uploads/2010/02/Limitation_seminar_-_Dov_Ohrenstein.pdf> Last Accessed: 27/02/2016

[13] Dov Ohrenstein, ‘Limitation Periods:- What’s the limit’ <http://radcliffechambers.com/wp-content/uploads/2010/02/Limitation_seminar_-_Dov_Ohrenstein.pdf> Last Accessed: 27/02/2016

[14] Limitation Act 1980 Section 11

[15] Limitation Act 1980 Section 14

[16] Limitation Act 1980 Section 28

[17] Limitation Act 1980 Section 28

[18] Limitation Act 1980 Section 38

[19] Limitation Act 1980 Section 33

[20] Limitation Act 1980 Section 35

[21] Limitation Act 1980 Section 35

[22] Limitation Act 1980 Section 35

[23] The In-House Lawyer Official Website ‘Clarifying the law on limitation periodshttp://www.inhouselawyer.co.uk/index.php/litigation-a-dispute-resolution/7464-clarifying-the-law-on-limitation-periods Last Accessed: 27/02/2016

[24] Law Commission, ‘Limitation of Actions’, Law Com No 270 < http://www.lawcom.gov.uk/wp-content/uploads/2015/03/lc270_Limitation_of_Actions.pdf> Last Accessed: 27/02/2016

[25] Law Commission, ‘Limitation of Actions’, Law Com No 270 < http://www.lawcom.gov.uk/wp-content/uploads/2015/03/lc270_Limitation_of_Actions.pdf> Last Accessed: 27/02/2016

[26] Law Commission, ‘Limitation of Actions’, Law Com No 270 < http://www.lawcom.gov.uk/wp-content/uploads/2015/03/lc270_Limitation_of_Actions.pdf> Last Accessed: 27/02/2016

[27] My Lawyer Official Website, ‘Unfair Contract Terms’ < http://www.mylawyer.co.uk/unfair-contract-terms-a-A76062D32725/> Last Accessed: 21/02/2016

[28] Christian Law Firm Official Website, ‘Contract Law: Unfair Contract Terms Act 1977’ < http://christianlawfirm.co.uk/blog/?p=541> Last Accessed: 21/02/2016

[29] Pinsent Masons Official Website, ‘Advice Note: Limitation’ <http://www.pinsentmasons.com/PDF/Limitation.pdf> Last Accessed: 21/02/2016

[30] Unfair Contract Terms Act 1977 Parts 1, 2 and 3

[31] Law Commission Official Website, ‘Unfair Terms in Contracts’, Law Com No.298 < http://www.lawcom.gov.uk/wp-content/uploads/2015/03/lc292_Unfair_Terms_In_Contracts_Summary.pdf> Last Accessed: 21/02/2016

[32] Elizabeth MacDonald, ‘Unifying Unfair Terms Legislation’, (2004), 67 MLR 69, Page 69

[33] Mindy Chen-Wishart, ‘Regulating Unfair Terms’, (Hart Publishing, 2015), Page 105

[34] Law Commission Official Website, ‘Unfair Terms in Contracts’, Law Com No.298 < http://www.lawcom.gov.uk/wp-content/uploads/2015/03/lc292_Unfair_Terms_In_Contracts_Summary.pdf> Last Accessed: 21/02/2016

[35] Law Teacher Official Website, ‘Will Unfair Contract Terms Bill improve Law’ < http://www.lawteacher.net/free-law-essays/contract-law/will-unfair-contract-terms-bill-improve-law-contract-law-essay.php> Last Accessed: 21/02/2016

[36] Unfair Contract Terms 1977 Sections 6 and 7

[37] Unfair Contract Terms 1977 Sections 6 and 7

[38] My Lawyer Official Website, ‘Unfair Contract Terms’ < http://www.mylawyer.co.uk/unfair-contract-terms-a-A76062D32725/> Last Accessed: 21/02/2016

[39] E-Law Resources Official Website, ‘Unfair Contract Terms Act 1977’ < http://www.e-lawresources.co.uk/Unfair-Terms---Regulation-by-statute.php> Last Accessed: 21/02/2016

[40] My Lawyer Official Website, ‘Unfair Contract Terms’ < http://www.mylawyer.co.uk/unfair-contract-terms-a-A76062D32725/> Last Accessed: 21/02/2016

[41] My Lawyer Official Website, ‘Unfair Contract Terms’ < http://www.mylawyer.co.uk/unfair-contract-terms-a-A76062D32725/> Last Accessed: 21/02/2016

[42] My Lawyer Official Website, ‘Unfair Contract Terms’ < http://www.mylawyer.co.uk/unfair-contract-terms-a-A76062D32725/> Last Accessed: 21/02/2016

[43] My Lawyer Official Website, ‘Unfair Contract Terms’ < http://www.mylawyer.co.uk/unfair-contract-terms-a-A76062D32725/> Last Accessed: 21/02/2016

[44] My Lawyer Official Website, ‘Unfair Contract Terms’ < http://www.mylawyer.co.uk/unfair-contract-terms-a-A76062D32725/> Last Accessed: 21/02/2016

[45] My Lawyer Official Website, ‘Unfair Contract Terms’ < http://www.mylawyer.co.uk/unfair-contract-terms-a-A76062D32725/> Last Accessed: 21/02/2016

[46] Consumer Rights Act 2015 Section 65

[47] My Lawyer Official Website, ‘Unfair Contract Terms’ < http://www.mylawyer.co.uk/unfair-contract-terms-a-A76062D32725/> Last Accessed: 21/02/2016

[48] My Lawyer Official Website, ‘Unfair Contract Terms’ < http://www.mylawyer.co.uk/unfair-contract-terms-a-A76062D32725/> Last Accessed: 21/02/2016

[49] My Lawyer Official Website, ‘Unfair Contract Terms’ < http://www.mylawyer.co.uk/unfair-contract-terms-a-A76062D32725/> Last Accessed: 21/02/2016

[50] My Lawyer Official Website, ‘Unfair Contract Terms’ < http://www.mylawyer.co.uk/unfair-contract-terms-a-A76062D32725/> Last Accessed: 21/02/2016

[51] Unfair Contract Terms 1977 Schedule 2 Part 1

[52] Unfair Contract Terms 1977 Schedule 2 Part 1

[53] Unfair Contract Terms 1977 Schedule 2 Part 1

[54] Unfair Contract Terms 1977 Schedule 2 Part 1

[55] Unfair Contract Terms 1977 Schedule 2 Part 1

[56] Law Commission Official Website, ‘Unfair Terms in Contracts’, Law Com No.298 < http://www.lawcom.gov.uk/wp-content/uploads/2015/03/lc292_Unfair_Terms_In_Contracts_Summary.pdf> Last Accessed: 21/02/2016

[57] Limitation Act 1980 Sections 2, 14A and 14B

[58] Limitation Act 1980 Sections 2, 14A and 14B

[59] Limitation Act 1980 Sections 2, 14A and 14B

[60] Limitation Act 1980 Section 2

[61] Limitation Act 1980 Section 11

[62] Limitation Act 1980 Sections 2 and 32

[63] Limitation Act 1980 Section 4A

[64] Limitation Act 1980 Section 5

[65] Limitation Act 1980 Section 8

[66] Limitation Act 1980 Sections 15, 17 and 20

[67] Limitation Act 1980 Section 19

[68] Limitation Act 1980 Section 21(3)

[69] Limitation Act 1980 Section 22

[70] Limitation Act 1980 Section 10

[71] Limitation Act 1980 Section 24