PastPaper.workedSolution
This scenario requires an analysis of contract law principles concerning the doctrine of privity, the incorporation of exclusion clauses, construction of clauses, and statutory controls on exclusion clauses. First, regarding Evelyn, the doctrine of privity of contract dictates that only parties to a contract can acquire rights or incur liabilities under it, as established in Tweddle v Atkinson and Dunlop Pneumatic Tyre Co Ltd v Selfridge. Since Evelyn is not a party to the contract between Clara and BakePro Ltd, she cannot sue BakePro in contract. The Contracts (Rights of Third Parties) Act 1999 does not apply because the agreement does not purport to confer a benefit on her, nor is she expressly identified. Consequently, Evelyn has no remedy in contract law and must pursue a claim in the tort of negligence instead. Second, regarding Clara, there is a valid contract. BakePro will attempt to rely on Clause 8 to exclude liability. To be effective, the clause must be incorporated into the contract. Since Clara signed the hire agreement, the rule in L'Estrange v Graucob applies: a party is bound by the terms of a signed written contract, whether they have read them or not. There is no evidence of misrepresentation (as in Curtis v Chemical Cleaning) or non est factum. Therefore, Clause 8 is successfully incorporated. Third, the clause must be construed to see if it covers the losses. Under the contra proferentem rule, any ambiguity is construed against the party relying on it. While Clause 8 covers 'damage to property or personal injury caused by any defect', courts interpret such clauses strictly. However, even if the clause is construed to cover the negligent assembly, it must comply with statutory controls. Fourth, as this is a business-to-business (B2B) transaction, the Unfair Contract Terms Act (UCTA) 1977 applies, rather than the Consumer Rights Act 2015. Under Section 2(1) of UCTA 1977, a contracting party cannot exclude or restrict liability for death or personal injury resulting from negligence. Therefore, any attempt by BakePro to exclude liability for personal injury (should Clara herself have been injured) is completely void. Under Section 2(2) of UCTA 1977, liability for other types of loss or damage, such as the £3,000 preparation table and the £1,500 lost profits, can only be excluded if the term satisfies the 'requirement of reasonableness' defined in Section 11 and Schedule 2. The burden of proof is on BakePro to show the clause was reasonable. Applying the Schedule 2 guidelines: the parties had unequal bargaining power as Clara signed a standard-form agreement; Clara had no realistic opportunity to negotiate; and BakePro, as the specialist supplier and installer, was in a much better position to insure against negligence. Therefore, Clause 8 is highly likely to be deemed unreasonable and held invalid. In conclusion, Evelyn has no claim in contract due to privity. Clara can successfully sue BakePro Ltd for the £3,000 damage to her preparation table and the £1,500 loss of profits, as the exclusion clause will fail the reasonableness test under UCTA 1977.
PastPaper.markingScheme
Knowledge and Understanding (10 marks): 1-4 marks: Basic awareness of exclusion clauses or privity, with limited or no case law citations. 5-7 marks: Good explanation of incorporation by signature (L'Estrange v Graucob), the doctrine of privity (Tweddle v Atkinson), and the role of UCTA 1977. 8-10 marks: Detailed and accurate explanation of privity, the signature rule, and UCTA 1977 provisions, specifically distinguishing Section 2(1) (absolute prohibition of excluding personal injury/death caused by negligence) and Section 2(2) (the reasonableness test for other losses under Section 11 and Schedule 2). Application and Analysis (10 marks): 1-4 marks: Minimal attempt to apply the rules to Clara and Evelyn's situations. 5-7 marks: Appropriate application of privity to Evelyn (noting she cannot sue in contract) and the signature rule to Clara. Some application of UCTA 1977 to the facts. 8-10 marks: Thorough and precise application of the law. Correctly identifies that Evelyn must sue in tort, not contract. Properly applies L'Estrange to Clara's signature. Systematically applies UCTA 1977, identifying that Clara's claims for property damage (£3,000) and loss of profit (£1,500) are subject to the reasonableness test, and uses Schedule 2 factors (bargaining power, insurance, lack of negotiation) to analyze why the clause is unreasonable. Evaluation and Conclusion (5 marks): 1-2 marks: Basic conclusion with little reasoning. 3-5 marks: Clear, balanced, and logical advice offered to both Clara and Evelyn, supported by a strong evaluation of BakePro's likelihood of successfully relying on Clause 8.