Control Of Exemption Clauses: Consumer Rights Act 2015 (Trader And Consumer Contracts – S61) – S2 Definition; S31 Exclusion Of Liability Goods Contracts; S57 Exclusion Of Liability Service Contracts; S62 Requirement For Contract Terms To Be Fair; S65 Negligence Liability; S68 Requirement For Transparency

Introduction To The Consumer Rights Act 2015

Background

• The Consumer Rights Act 2015 (CRA 2015) is the principal source of consumer contract protection in England and Wales.
• It was introduced to:
  • Simplify consumer law.
  • Consolidate previous legislation.
  • Strengthen consumer rights.
  • Improve clarity and accessibility.
  • Protect consumers against unfair contractual practices.
• Before the CRA 2015:
  • Consumer law was spread across several statutes.
  • Different remedies and protections existed in different pieces of legislation.
  • The law was often criticised for complexity.

Main Purposes Of The Act

Consumer Protection

• Protect consumers from unfair treatment.
• Prevent abuse of bargaining power.
• Control unfair contractual terms.
• Prevent traders excluding important legal obligations.

Commercial Fairness

• Encourage honest business behaviour.
• Promote confidence in markets.
• Create predictable legal standards.

Transparency

• Ensure consumers understand their rights.
• Ensure important terms are clearly communicated.

Part Of The Act Relevant To Exemption Clauses

• The Act controls:
  • Exclusion clauses.
  • Limitation clauses.
  • Unfair terms.
  • Consumer notices.
• It prevents traders from removing important consumer protections through contractual drafting.

Relationship With UCTA 1977

UCTA 1977

• Primarily controls exemption clauses generally.
• Important in business-to-business contracts.

CRA 2015

• Primarily controls trader-consumer contracts.
• Main source of consumer protection today.

Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total Personal A Grades, 7 Distinctions and 11 World Records For Educate A Change A Level Law Full Scale Course

Section 2: Definitions

Importance Of Section 2

• Section 2 contains important definitions.
• These definitions determine when consumer protection applies.
• Always the starting point in any CRA problem question.

Consumer

Definition

• Consumer
  • An individual acting for purposes wholly or mainly outside that individual’s trade, business, craft or profession.

Key Elements

Individual

• Must be a natural person.
• Companies are not consumers.

Outside Business Activity

• Contract entered primarily for personal purposes.
• Not mainly for commercial purposes.

Examples Of Consumers

Consumer

• Person buying television for home.
• Individual purchasing furniture for family use.
• Person purchasing mobile phone for personal use.
• Homeowner hiring decorator.

Not Consumer

• Company buying office equipment.
• Retailer purchasing stock.
• Builder purchasing materials for business.
• Accountant purchasing software for firm.

Trader

Definition

• Trader
  • Person acting for purposes relating to trade, business, craft or profession.

Examples

Traders

• Retail stores.
• Car dealerships.
• Builders.
• Electricians.
• Solicitors.
• Accountants.
• Online retailers.

Importance

• CRA applies only where trader contracts with consumer.

Trader-Consumer Contract

Meaning

• Contract between:
  • Trader.
  • Consumer.

Examples

Covered By CRA

• Consumer buys television from shop.
• Consumer hires plumber.
• Consumer books holiday.
• Consumer buys laptop online.

Not Covered By CRA Consumer Provisions

• Business purchasing machinery from supplier.
• Two companies contracting together.

Section 61

Importance

• Section 61 establishes that Part 2 controls unfair terms in consumer contracts.
• Applies fairness provisions to trader-consumer relationships.

Purpose

• Ensure consumers receive statutory protection.
• Prevent unfair contractual drafting.
• Regulate exemption clauses.

Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total Personal A Grades, 7 Distinctions and 11 World Records For Educate A Change A Level Law Full Scale Course

Section 31: Exclusion Of Liability In Goods Contracts

Purpose

• Prevent traders excluding important statutory rights relating to goods.

Background

• Part 1 Chapter 2 of CRA creates important consumer rights concerning goods.
• These include:
  • Section 9.
  • Section 10.
  • Section 11.
  • Other statutory protections.

Main Rule

• Traders cannot exclude or restrict liability for certain statutory rights concerning goods.

Rights Protected

Section 9

• Goods must be of satisfactory quality.

Section 10

• Goods must be fit for particular purpose.

Section 11

• Goods must be as described.

Other Related Rights

• Rights concerning samples.
• Rights concerning models.
• Rights relating to ownership.

Effect Of Section 31

Clause Attempting Exclusion

• Ineffective.

Consumer Protection Remains

• Consumer retains statutory rights.

Examples

Invalid Clause

• “Goods sold as seen. We exclude all responsibility for quality.”
• Ineffective.

Invalid Clause

• “The customer accepts goods regardless of defects.”
• Ineffective.

Invalid Clause

• “No claims may be made if goods fail to match description.”
• Ineffective.

Importance

• Prevents traders contracting out of basic quality standards.
• Protects consumer expectations.
• Supports market confidence.

Why Parliament Included Section 31

Consumer Vulnerability

• Consumers cannot easily assess quality before purchase.

Information Imbalance

• Trader usually knows more about goods.

Fairness

• Basic quality rights should not be removable.

Public Confidence

• Consumers need confidence in purchasing goods.

Section 57: Exclusion Of Liability In Service Contracts

Purpose

• Protect consumers purchasing services.

Background

• Consumer service contracts contain implied terms under:
  • Section 49.
  • Section 50.
  • Section 52.

Main Rule

• Traders cannot exclude or restrict liability for key statutory obligations concerning services.

Rights Protected

Section 49

• Reasonable care and skill.

Section 50

• Information provided about service becomes binding.

Section 52

• Service must be performed within reasonable time where no time agreed.

Effect

• Clauses attempting to remove these rights are ineffective.

Examples

Invalid Clause

• “We accept no responsibility for careless workmanship.”

Invalid Clause

• “Customer accepts service regardless of quality.”

Invalid Clause

• “No claims allowed for negligent performance.”

Importance

• Ensures minimum professional standards.
• Protects consumers from poor workmanship.
• Encourages competent service provision.

Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total Personal A Grades, 7 Distinctions and 11 World Records For Educate A Change A Level Law Full Scale Course

Section 62: Requirement For Contract Terms To Be Fair

Importance

• One of the most important provisions of the CRA 2015.
• Central control mechanism for unfair terms.

Core Rule

• An unfair term is not binding on the consumer.

Effect

Unfair Term

• Not enforceable.

Rest Of Contract

• Usually remains effective if possible.

Purpose

• Prevent exploitation.
• Protect weaker contracting party.
• Promote fair dealing.

The Fairness Test

Statutory Test

• A term is unfair if:
  • Contrary to requirement of good faith.
  • Causes significant imbalance in parties’ rights and obligations.
  • To the detriment of the consumer.

Element 1: Significant Imbalance

Meaning

• Term heavily favours trader.
• Consumer disadvantaged.

Examples

• Excessive penalties.
• One-sided rights.
• Extreme limitations on remedies.

Element 2: Detriment To Consumer

Meaning

• Consumer suffers disadvantage.

Examples

• Financial loss.
• Reduced legal protection.
• Restricted remedies.

Element 3: Contrary To Good Faith

Meaning

• Lack of fair dealing.
• Lack of openness.
• Lack of honesty.
• Exploitation of weaker party.

Good Faith

Includes

• Fairness.
• Transparency.
• Openness.
• Honest commercial practice.

Importance

• Traders must act fairly throughout contracting process.

Schedule 2 Grey List

Meaning

• List of potentially unfair terms.
• Not automatically unfair.
• Provides guidance.

Examples

Excessive Penalties

Unfair Cancellation Charges

One-Sided Variation Clauses

Excessive Compensation Clauses

Terms Allowing Trader Excessive Discretion

Importance

• Helps courts identify suspect clauses.

Case: Director General of Fair Trading v First National Bank plc (2001)

Facts

• Concerned fairness of consumer term.

Decision

• House of Lords considered meaning of fairness and good faith.

Principle

• Good faith requires fair and open dealing.

Significance

• Leading authority on fairness under consumer legislation.

Importance For Exams

• Key authority when discussing fairness and good faith.

Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total Personal A Grades, 7 Distinctions and 11 World Records For Educate A Change A Level Law Full Scale Course

Section 65: Negligence Liability

Purpose

• Provides strong protection regarding negligence.

Core Rule

• Trader cannot exclude or restrict liability for death or personal injury resulting from negligence.

Effect

• Such clauses are automatically ineffective.

Similarity To UCTA

• Similar to UCTA section 2(1).

Examples

Invalid Clause

• “We accept no responsibility for death caused by our negligence.”

Invalid Clause

• “Customer assumes all risk of personal injury.”

Invalid Clause

• “Business not liable for injuries caused by negligent staff.”

Why This Rule Exists

Protection Of Human Safety

• Death and injury are particularly serious harms.

Public Policy

• Businesses should not avoid responsibility for dangerous conduct.

Deterrence

• Encourages safe business practices.

Importance

• Strongest statutory protection.
• Clear rule.
• Easy application.

Evaluation

Strengths

• Strong consumer protection.
• Promotes safety.
• Supports public confidence.

Weaknesses

• Limits contractual freedom.
• Businesses cannot negotiate alternative arrangements.

Section 68: Requirement For Transparency

Purpose

• Ensure consumers understand contractual terms.

Core Rule

• Terms must be transparent.

Meaning Of Transparent

Plain Language

• Simple wording.

Intelligible Language

• Easy to understand.

Legible Presentation

• Readable format.

Why Transparency Matters

Consumers Often Do Not Read Terms

• Contracts can be lengthy.
• Legal language may be complex.

Information Imbalance

• Traders draft contracts.
• Consumers rarely negotiate.

Fair Decision-Making

• Consumers should understand obligations before agreeing.

Examples Of Transparent Terms

Clear Wording

• “Refunds are available within 30 days.”

Readable Layout

• Proper headings.
• Clear font.
• Logical structure.

Plain English

• Minimal legal jargon.

Examples Of Non-Transparent Terms

Tiny Print

Hidden Clauses

Technical Language

Ambiguous Wording

Complicated Legal Terminology

Relationship Between Transparency And Fairness

Transparent Term

• More likely fair.

Hidden Or Confusing Term

• More likely unfair.

Importance

• Transparency supports good faith.
• Transparency promotes informed consent.
• Transparency assists consumer protection.

Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total Personal A Grades, 7 Distinctions and 11 World Records For Educate A Change A Level Law Full Scale Course

Relationship Between Sections 31, 57, 62, 65 And 68

Section 31

• Protects rights relating to goods.

Section 57

• Protects rights relating to services.

Section 62

• Controls unfair terms generally.

Section 65

• Prevents exclusion of liability for death or personal injury caused by negligence.

Section 68

• Requires transparency.

Combined Effect

• Traders cannot:
  • Remove basic consumer rights.
  • Use unfair terms.
  • Hide important obligations.
  • Avoid liability for negligent injury.

Examination Problem Question Method

Step 1

• Identify whether CRA applies.

Is There A Consumer?

Is There A Trader?

Is There A Trader-Consumer Contract?

Step 2

• Identify exemption clause.

Step 3

• Determine relevant section.

Goods

• Section 31.

Services

• Section 57.

General Fairness

• Section 62.

Negligence

• Section 65.

Transparency

• Section 68.

Step 4

• Apply statutory test.

Step 5

• Conclude whether clause is effective.

Strengths Of CRA Controls

Strong Consumer Protection

• Extensive statutory safeguards.

Fairness

• Prevents exploitation.

Transparency

• Encourages understandable contracts.

Public Confidence

• Supports consumer trust.

Modern Legislation

• Reflects modern contracting practices.

Weaknesses Of CRA Controls

Reduced Freedom Of Contract

• Traders cannot always allocate risks freely.

Uncertainty

• Fairness test can be difficult to predict.

Compliance Costs

• Businesses may incur greater costs.

Litigation

• Courts still required to determine fairness.

Key Cases To Memorise

Director General of Fair Trading v First National Bank plc (2001)

• Good faith.
• Fairness.
• Consumer protection.

Key Statutory Sections To Memorise

Section 2

• Definitions.

Section 31

• Goods rights cannot generally be excluded.

Section 57

• Service rights cannot generally be excluded.

Section 62

• Unfair terms not binding.

Section 65

• Death or personal injury caused by negligence cannot be excluded.

Section 68

• Transparency requirement.

Quick Revision Table

Examination Evaluation Points

• The Consumer Rights Act 2015 is the primary source of consumer contract protection.
• Section 2 defines consumers and traders.
• CRA protections apply only to trader-consumer contracts.
• Section 31 prevents exclusion of important rights concerning goods.
• Section 57 prevents exclusion of important rights concerning services.
• Section 62 provides the central fairness test.
• Unfair terms are not binding on consumers.
• Significant imbalance and lack of good faith are key concepts.
• Section 65 provides strong protection regarding negligence causing death or personal injury.
• Section 68 requires transparency and clear drafting.
• The Act balances commercial freedom with consumer protection.
• Modern contract law places considerable emphasis on fairness, transparency and informed consumer choice.

Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total Personal A Grades, 7 Distinctions and 11 World Records For Educate A Change A Level Law Full Scale Course