8/10/2019 The Unfair Contract Terms Act

1/2

The Unfair Contract Terms Act (referred to as UCTA bybusiness and legal insiders) is a body of law designed toprimarily protect consumers who may be prejudiced by theweaker bargaining positions they occupy in most consumer

transactions. More generally, the preamble to UCTA reads asfollows: An Act to impose further limits on the extent to whichcivil liability for breach of contract, or for negligence or otherbreach of duty, can be avoided by means of contract termsand otherwise. The full text of UCTA may be accessedhere.

Negligence liability Section 2 of UCTA

UCTA prohibits a person from using a contract term or noticeto exclude his own liability for negligent acts causing death orpersonal injury on another. For instance, an amusement parkoperator is unable to rely on a signboard disclaiming liabilityfor rollercoaster failure leading to personal harm to the visitor. In contrast, for loss or damage beyond death or personalinjury, exclusion clauses are valid insofar as they arereasonable. UCTA itself defines reasonablenesssee belowat Glossary.

Contractual liability

Section 3 of UCTAIn the case of a consumer dealing with a business entity, if thetransaction is entered into using the latters standard form (forinstance, when you sign up with a telco on their standardcontract), section 3 applies. This section disallows thebusiness from using its standard contractual terms to

1. Exclude its own liability for breaches of terms;2. Excluding or limiting its own liability for breaches of

terms, and

3. Relying on a term to render a different kind of servicefrom that which was reasonably expected of him, ornot service at all,

unless the standard contractual term is reasonable. Onceagain, reasonableness rears its amorphous head!

Indemnity clauses Section 4 of UCTA

Additionally, section 4 applies to protect consumers from

being made to indemnify another person in respect of liabilitythat may be incurred by the other for negligence or breach of

http://statutes.agc.gov.sg/aol/search/display/view.w3p;page=0;query=DocId%3A%22036b6041-12a6-4175-84ad-42cd4e62d9f6%22%20Status%3Ainforce%20Depth%3A0;rec=0;whole=yeshttp://statutes.agc.gov.sg/aol/search/display/view.w3p;page=0;query=DocId%3A%22036b6041-12a6-4175-84ad-42cd4e62d9f6%22%20Status%3Ainforce%20Depth%3A0;rec=0;whole=yeshttp://statutes.agc.gov.sg/aol/search/display/view.w3p;page=0;query=DocId%3A%22036b6041-12a6-4175-84ad-42cd4e62d9f6%22%20Status%3Ainforce%20Depth%3A0;rec=0;whole=yeshttp://statutes.agc.gov.sg/aol/search/display/view.w3p;page=0;query=DocId%3A%22036b6041-12a6-4175-84ad-42cd4e62d9f6%22%20Status%3Ainforce%20Depth%3A0;rec=0;whole=yes

8/10/2019 The Unfair Contract Terms Act

2/2

contract, except in so far as the contract term satisfies therequirement of reasonableness. For instance, this could applyin the case of a loan guaranteewhether an indemnity clauseis reasonable would depend on the usual banking practice in

the industry.

Consumer products Section 5 of UCTA

Consumer products are generally products used for privateconsumption, as opposed to business use. For instance, abottle of Yakult is a consumer product.

The manufacturer or retailer cannot rely on a term or notice(usually printed on the product itself) to exclude liability forproduct defect or negligent manufacturing or distribution.

Sale and hire-purchase Section 6 of UCTAVarious liabilities for breach of obligation in a sale and hire-purchase contract cannot be excluded or restricted. For moredetails, do refer tosection 6of UCTA. These obligationsinclude, in general, implied assurances that the seller orowner that he has good title to the goods, and that the goodsin question are of good quality, are usable for their general

purpose, and that they conform to their marketingdescriptions.

Goods that require transfer of possession or ownership Section 7 of UCTA

Similarly,section 7of UCTA imposes restrictions on the use ofcontractual clauses to exclude or limit liability in certainsituations concerning contracts transferring possession orownership. Similar to section 6, section 7 is designed to

protect the party from unreasonable terms that take away thatpartys rights, such as implied assurances that the seller orowner that he has good title to the goods, that the goods inquestion are of good quality, are usable for their generalpurpose, and that they conform to their marketingdescriptions.

Special contractsCertain contracts, such as contracts for insurance, do not fallwithin the purview of the UCTA. These limitations are outlined

in theFirst Scheduleof UCTA.

http://statutes.agc.gov.sg/aol/search/display/view.w3p;ident=2973f953-9334-49d9-86bd-88098a928727;page=0;query=DocId%3A%22036b6041-12a6-4175-84ad-42cd4e62d9f6%22%20Status%3Ainforce%20Depth%3A0;rec=0#pr6-he-.http://statutes.agc.gov.sg/aol/search/display/view.w3p;ident=2973f953-9334-49d9-86bd-88098a928727;page=0;query=DocId%3A%22036b6041-12a6-4175-84ad-42cd4e62d9f6%22%20Status%3Ainforce%20Depth%3A0;rec=0#pr6-he-.http://statutes.agc.gov.sg/aol/search/display/view.w3p;ident=2973f953-9334-49d9-86bd-88098a928727;page=0;query=DocId%3A%22036b6041-12a6-4175-84ad-42cd4e62d9f6%22%20Status%3Ainforce%20Depth%3A0;rec=0#pr6-he-.http://statutes.agc.gov.sg/aol/search/display/view.w3p;ident=2973f953-9334-49d9-86bd-88098a928727;page=0;query=DocId%3A%22036b6041-12a6-4175-84ad-42cd4e62d9f6%22%20Status%3Ainforce%20Depth%3A0;rec=0#pr7-he-.http://statutes.agc.gov.sg/aol/search/display/view.w3p;ident=2973f953-9334-49d9-86bd-88098a928727;page=0;query=DocId%3A%22036b6041-12a6-4175-84ad-42cd4e62d9f6%22%20Status%3Ainforce%20Depth%3A0;rec=0#pr7-he-.http://statutes.agc.gov.sg/aol/search/display/view.w3p;ident=2973f953-9334-49d9-86bd-88098a928727;page=0;query=DocId%3A%22036b6041-12a6-4175-84ad-42cd4e62d9f6%22%20Status%3Ainforce%20Depth%3A0;rec=0#pr7-he-.http://statutes.agc.gov.sg/aol/search/display/view.w3p;ident=db76a13f-a3e9-4669-807b-5e0e926d6cc5;page=0;query=DocId%3A%22036b6041-12a6-4175-84ad-42cd4e62d9f6%22%20Status%3Ainforce%20Depth%3A0;rec=0#Sc1-.http://statutes.agc.gov.sg/aol/search/display/view.w3p;ident=db76a13f-a3e9-4669-807b-5e0e926d6cc5;page=0;query=DocId%3A%22036b6041-12a6-4175-84ad-42cd4e62d9f6%22%20Status%3Ainforce%20Depth%3A0;rec=0#Sc1-.http://statutes.agc.gov.sg/aol/search/display/view.w3p;ident=db76a13f-a3e9-4669-807b-5e0e926d6cc5;page=0;query=DocId%3A%22036b6041-12a6-4175-84ad-42cd4e62d9f6%22%20Status%3Ainforce%20Depth%3A0;rec=0#Sc1-.http://statutes.agc.gov.sg/aol/search/display/view.w3p;ident=2973f953-9334-49d9-86bd-88098a928727;page=0;query=DocId%3A%22036b6041-12a6-4175-84ad-42cd4e62d9f6%22%20Status%3Ainforce%20Depth%3A0;rec=0#pr7-he-.http://statutes.agc.gov.sg/aol/search/display/view.w3p;ident=2973f953-9334-49d9-86bd-88098a928727;page=0;query=DocId%3A%22036b6041-12a6-4175-84ad-42cd4e62d9f6%22%20Status%3Ainforce%20Depth%3A0;rec=0#pr6-he-.