The Gazette 1981

GAZETTE

JULY-AUGUST 1981

Exclusion Clauses in Contracts for the Sale of Goods Comment by the Director of Consumer Affairs A SPECIAL meeting of the Dublin Solicitors' Bar Association was held at Blackhall Place on Tuesday 12 May, 1981, on the topic of the Sale of Goods and Supply of Services Act, 1 9 80 ("the 1980 Act"). The speakers were Patrick Kilroy, Solicitor, William Earley, Solicitor, and Frank O'Riordan, Solicitor. Among those who attended the meeting was James Murray, Director of Consumer Affairs, who spoke from the floor. Mr. Murray made some very pertinent remarks regarding exclusion clauses in standard contracts for the supply of goods, in relation to the 1980 Act. Mr. Murray has subsequently kindly prepared a note of his remarks, which is set out below: "I am grateful for the opportunity to comment on a problem that has been referred to me by as many as ten different solicitors in the Dublin area who have been engaged in drafting standard terms of supply for business clients. "As you know, standard terms of supply commonly contain clauses excluding or restricting the seller's liability or the buyer's rights under the implied terms of the Sale of Go ods Acts. "Where the buyer deals as consumer it is clear that the seller's liability or the buyer's rights under Sections 12,13, 14 and 15 of the Sale of Goods Act, 1893 cannot be excluded and indeed it may be an offence to imply in a contract that such rights and liabilities are excluded or restricted (where the buyer deals as consumer). Where the buyer does not deal as consumer (i.e. in a contract between two persons in business) Section 55 of the 1893 Act (as amended by the 1980 Act) does in effect provide that certain implied terms may be excluded if such exclusions can be shown to be fair and reasonable. In other words, to the extent that it is fair and reasonable to do so, standard terms of supply may exclude or restrict the seller's liability to a degree when seller and buyer are both in business. The problem is that Section 11 (4) of the 1980 Act seems to make it an offence, in effect, to include in a contract, or other document, terms excluding or restricting the seller's liability under Sections 13, 14 and 15 of the 1893 Act, as amended. (Section 30 (4) of the 1980 Act seems to have the same effect for hire purchase transactions). How then can a solicitor draft standard terms purporting to restrict, say, a manufacturer's liability to his (business) buyers in such a way as to ensure that the manufacturer will not be prose- cuted under Section 1 1 (4) of the 1980 Act? Since it would be my task to prosecute under Section 11 (4), a number of solicitors have, not unnaturally, sought my views on this question. There is not an easy answer, at least in theory, to this

question, but there may in effect be a solution in practice — along the following lines. 1. Make it absolutely clear that the rights of a buyer who deals as consumer are in no way prejudiced by the relevant term — include a clear and conspicuous declaration to that effect. 2. For buyers who do not deal as consumer make it clear that the exclusion or restriction of the rights conferred by Sections 13, 14 and 15 of the 1983 Act, as amended, are subject to Section 55 of the 1893 Act, as amended. 3. Do not purport to exclude in any way the application of the test of fairness and reasonableness under Section 55 of the 1893 Act, as amended. It would be improper of me to say that no prosecutions will ever be taken in respect of contract terms which observe these guidelines — I cannot re-write the 1980 Act. However, in particular cases, any wise prosecutor would have to consider the possible attitude a court might take to the proposition that the subsection prohibits the ex- clusion of certain terms while other sections of the 1980 Act specifically provide that such terms may be excluded in business dealings (subject to the proviso that such ex- clusions are fair and reasonable). If it was also clear that the consumer's rights were not prejudiced by the exclusion clauses and there was no indication that any business buyers had been misled as to their rights, the prosecution's task would be even more difficult. (In passing it should be noted that the above con- siderations apply only to attempts to exclude the opera- tion of Sections 13, 14 and 15 of the 1893 Act, as amended. Any provision purporting to exclude the opera- tion of Section 12 is of course always void.D

ROYAL COLLEGE OF SURGEONS IN IRELAND The Royal College of Surgeons in Ireland is a privately owned Institution founded in 1784. It has responsibility for post-graduate education of surgeons, radiologists, anaesthetists, dentists and nurses. The College manages an International Medical School for the training of doctors, many of whom come from Third World countries where there is a great demand and need for doctors. Research in the College includes work on cancer, thrombosis, high blood pressure, heart and blood vessel disease, blindness, mental handicap, birth dcfects and many other human ailments. The College being an independent institution is financed largely through gifts and donations. Your donation, covenant or legacy, will help to keep the College in the forefront of medical research and medical education. The College is officially recog- nised as a Charity by the Revenue Commis- sioners. All contributions will be gratefully re- ceived. Enquiries to: The Registrar, Royal College of Surgeons in Ireland, St. Stephen's Green, Dublin 2.

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