Published on 8th March, 2016 by Benjamin Li Yong Le
Unfair contract terms are governed by the Unfair Contracts Act.
The law that covers unfair contracts can be found in the Unfair Contracts Terms Act ("UCTA"). The Unfair Contract Terms Act was designed to protect consumers who may be prejudiced by their weaker bargaining positions that they occupy in most consumer transactions.
This does not mean that any contract that is perceived to be unfair by a person can be cancelled under the UCTA as the UCTA narrowly restricts the scope of "unfair" to excluding liability under a contract.
Exclusion For Negligence
Section 2 of the UCTA provides that a person cannot by reference to any contract term or to a notice given to persons generally or to particular persons exclude or restrict his liability for death or personal injury resulting from negligence.
The High Court in Xu Jin Long v Nian Chuan Construction Pte Ltd noted that "it is clear that any contractual term that prevents a party from being sued for negligence for death or injury is a restriction of liability under Section 2 of the UCTA and not enforceable".
Section 3 of the UCTA applies when one contracting party deals as consumer or on the other’s ("Party B") written standard terms of business. Party B cannot include as a term in his written standard terms of business a contract term to exclude or restrict any liability of Party B in respect of Party B's breach and then seek to enforce it when Party B himself in breach of contract.
Neither can he claim to be entitled to perform his obligations substantially different from that which was reasonably expected of him, or to render no performance at all.
The UCTA also provides a sort of "guarantee" for consumer goods.
In the case of goods ordinarily supplied for private use or consumption, a merchant cannot insert a contract term to exclude liability for loss or damage where such where loss or damage (i) arises from the goods proving defective while in consumer use; or (ii) results from the negligence of a person concerned in the manufacture or distribution of the goods. Therefore a manufacturer cannot print a term or notice on the product label to exclude liability for product defect or negligent manufacturing or distribution.