Law of Business Transactions assignment Essay Example | Topics and Well Written Essays - 2000 words

Law of Business Transactions assignment - Essay Example nited Floors Ltd had included an exclusion clause in its contract, which required intimation of any alleged defects within three weeks of fitting the carpets. As such, it had included a clause, whereby its liability per contract was to be restricted to five hundred pounds. Peter is seeking refund of the two, thousand, three hundred pounds paid by him and compensation for the business lost, during the time the carpet was being replaced. United Floors Ltd refuses to accept and relies on its exclusion clause. An exclusion clause can be enforced by resorting to adhesion contracts or standard form contracts. The party which draws up such contracts offers negligible choice to the other party to the contract. In the words of Downes, an authority on contract law, wherever, there is great disparity in the bargaining power of the parties to the contract, exclusion clauses can prove to be extremely prejudicial.1 Legislation like the Unfair Contract Terms Act 1977 or UCTA and the Unfair Terms of the Consumer Contract Regulations 1999 or UTCCR have been enacted, in order to exercise stringent control on the use of exclusion clauses. The UCTA makes a business liable for not fulfilling obligations or duties that are consequent to what has been done or is to be done in the normal course of business2. Peter’s contract with the United Floors Ltd is subject to the UCTA, because consumer contracts fall under its purview3. In contractual terms reasonableness is of paramount importance and the UCTA verifies as to whether an exclusion clause, after taking into consideration the circumstances that should have normally been known to the contracting parties, is rational4. In this manner the UCTA grants wide discretion to the courts, in determining whether an exclusion clause is reasonable or not. If a contracting party wishes to take recourse to an exclusion clause in the contract, then the onus of establishing its reasonableness rests on it5. The UTCCR deals with all the contractual