Last amended by Consumer Rights Act 2015 in 2015. Removed consumer contracts from UCTA's scope. UCTA now applies primarily to business-to-business contracts.
Independent editorial summary — not the official statute text. Read the official version on legislation.gov.uk.
Summary
The Unfair Contract Terms Act 1977 (UCTA) regulates the extent to which liability for breach of contract or negligence can be excluded or restricted by contract terms or notices. Despite its name, it does not apply to all unfair terms — it specifically targets exclusion and limitation clauses. It renders certain exclusion clauses completely void (e.g., excluding liability for death or personal injury caused by negligence) and subjects others to a test of reasonableness. For consumer contracts, UCTA has been largely superseded by the Consumer Rights Act 2015, but it remains important for business-to-business contracts.
Key Points
- Cannot exclude or restrict liability for death or personal injury resulting from negligence (s.2(1))
- Other loss from negligence can only be excluded if reasonable (s.2(2))
- Cannot exclude liability for breach of implied terms in sale of goods (as against consumers, now under CRA 2015) (s.6)
- Reasonableness test: the term must be fair and reasonable having regard to the circumstances (s.11)
- Guidelines for the reasonableness test in Schedule 2 (relative bargaining power, inducements, custom of the trade)
- Written standard terms of business subject to reasonableness test (s.3)
Parts & Sections
Amendments History
2015 — Consumer Rights Act 2015
Removed consumer contracts from UCTA's scope. UCTA now applies primarily to business-to-business contracts.
Frequently asked questions
- Does the Unfair Contract Terms Act apply to every unfair term in a contract?
- The Act specifically targets exclusion and limitation clauses, not all unfair terms. It makes certain clauses completely void, such as those excluding liability for death or personal injury caused by negligence. Other clauses are subject to a reasonableness test. For consumer contracts, the Act has been largely superseded by the Consumer Rights Act 2015, but it remains important for business-to-business agreements.
- Can I exclude liability for personal injury caused by negligence in a contract?
- No, you cannot exclude or restrict liability for death or personal injury resulting from negligence. This is a strict prohibition under the Act. However, for other types of loss or damage caused by negligence, liability can only be excluded or restricted if the relevant contract term satisfies the requirement of reasonableness.
- How is the 'reasonableness' of a contract term determined?
- A term is considered reasonable if it is fair and reasonable having regard to the circumstances known or reasonably contemplated by the parties when the contract was made. Guidelines include considering the relative bargaining power of the parties, any inducements to accept the term, and the custom of the trade.
- What rules apply to written standard terms of business?
- If one party deals on the other's written standard terms of business, the other party cannot exclude or restrict liability for breach of contract, or claim to render a substantially different performance, unless the term satisfies the reasonableness test. This ensures that standard terms are fair and reasonable in the context of the specific transaction.
- Does the Unfair Contract Terms Act still apply to consumer contracts?
- The Consumer Rights Act 2015 removed consumer contracts from the scope of the Unfair Contract Terms Act. Consequently, the Act now applies primarily to business-to-business contracts. While it is less relevant for individual consumers, it remains a significant piece of legislation for commercial agreements between businesses.