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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
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