Contract law

1. When counsel wants to put forward and argument in order to convince the courts that a case should be seen as per incuriam, the which is being questioned by counsel must satisfy certain criteria. When counsel is putting forward his argument to ask the court to make a case per incuriam, counsel must show that, in that case, the court did not consider all the relevant legal issues.

Counsel needs to show that the correct statute was not applied or the relevant legal authority was not considered, i.e. inappropriate case was applied. The best argument for a case being per incuriam would be that the inconsistent use of the law affected the outcome of the case. This is not to suggest that the courts made a mistake or were wrong, just that they overlooked relevant legal authorities.

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This can be seen in the case of Broome v Cassell (1971) where the court declared the case to be per incuriam on the bases that during the trial two House of Lords authorities were not cited to the court. Another example of a case being declared per incuriam is the case of Rakhit v Carthy (1990) on the bases that the previous court misinterpreted s. 67(3) of the Rent Act 1977.

Therefore, if counsel wants to put forward a successful argument of a case being per incuriam, he has to establish that the courts have made an inconsistent decision, and that if it had not been for this inconsistency the outcome of the case would have been different.

2. During litigation, there is a process known as disclosure. This process is whereby all the parties in a case disclose to each other all the documents in their possession and all the documents which they wish to rely upon during the trial. All the parties have to disclose all the documents whether such documents assist them. However, they do not have to disclose privileged documents. This process takes place after the allocation questionnaires have been filed. The parties have to serve a list of documents. This list contains the identity of the all the documents that will be disclosed. In some cases, the parties have to send copies of all the documents to the other side. In smaller cases it is normal practice to send copies of the all the documents with the list of documents. In larger cases the parties have to provide copies of any document, that appear on the list, which are requested by the other side make all the documents available for inspection. The idea is for all the parties in a case to be fully aware of all the evidence and documents which are going to be used during the trial. There should be surprise evidence introduced during a trial.

In the case of Sam Business Systems the judge allowed documents that were not disclosed during the disclosure procedure to the other side to be presented to the court after the trial had stated. Even though a judge has the power to allow for a party to produce fresh documents in the middle of a trial, the other side can be at a serious disadvantage if they have not had the opportunity to examine such documents.

3. This question is asking us to give our opinion on whether we agree with the way which Judge Bowsher assesses the reasonableness of excluding and limiting terms in the contractual agreements discussed in the Sam Business Systems Ltd v Hedley and Company.

A judge would consider both common law and statute when making decision in a particular case. The reasonableness of an exclusion and limiting clause is decided in several ways. Firstly, a judge will look at the time the agreement was entered into. Secondly, was there sufficient notice of the terms in the contract, i.e. were terms of the contact made clear. Thirdly, was this a consumer or business to business transaction. A judge may also consider whether there was equal bargaining power between the parties to a contract. The contract in this case is a business to business contract. It is a commercial agreement. The court in this case made the judgement that the parties did have equal bargaining power. This can be found in paragraph 73 of the case.

The test for reasonableness I set out in the Unfair Contract Terms Act 1977. Section. 11 of the Act sets out the definition. When assessing whether the excluding and limiting clauses of an agreement and when considering this particular agreement, a judge would take into account the provisions of the Act and their applicability to this agreement. Section 6.3 of the Act states that a person who is not dealing as a consumer can exclude liability for breach of obligation under section 13, 14 or 15 of the Supply of Goods Act 1979. Section 11 of the Act was amended in 2002 in order to suggest that specific terms in an agreement could be excluded or limited providing they satisfy the reasonableness test.

In this case, as there was a commercial transaction the Act would apply. They could exclude liability in this specific contract. Section 3.2 of the Act states that when the basis of the contract is based on a party’s standard written terms of business then they cannot try to exclude or restrict the liability if in breach. Therefore, it is essential to understand whether the excluding and limiting terms were incorporated into the contract and was sufficient notice provided? In the case, it is clear that sufficient notice was provided so they cannot rely on s. 3.2 of this Act. The Judge pointed this out during the case.

As the clauses were entered into the contract in the correct manor and sufficient notice was provided, can it then be seen to be fair and reasonable for Sam to exclude and restrict liability? Section 7.3 of the Act provides that where goods pass from one part to another, a person dealing in a commercial transaction may exclude or restrict liability by reference to a specific term provided it satisfies the requirements of reasonableness. With the introduction of the Act the reliance on common law has become limited in a way that a party misrepresenting the effect that an exclusion clause may have as argued in Curtis v Chemical and Dyeing Co Ltd. According to Couchman v Hill an exclusion clause can be overridden by an inconsistency which was undertaken either at or prior to the time of entering into that contract.

Since the introduction of the Act, the courts do not have the power to render an exclusion clause in a contract to be illegal on the bases that is may be unreasonable. In this case there are several questions that need answering. Were the clauses and terms in the contract introduced at the right time, was the product specifically made for the other party and were they offered any remedies if there was a breach?

By considering what the Act says about the issue of reasonableness and how it has been applied in this case, it is appropriate to agree with the way in which the judge dealt with the question of reasonableness of the exclusion and limiting clauses in the contract.