Exclusion clauses & unfair terms
Exclusion and limitation clauses attempt to cut down liability, but they must be incorporated, correctly construed, and pass statutory controls. SQE1 expects you to route consumer contracts through the Consumer Rights Act 2015 and non-consumer contracts through UCTA 1977.
What "Exclusion clauses & unfair terms" covers
- The clause must first be incorporated by signature, reasonable notice, or course of dealing; unusual or onerous clauses require greater notice.
- Ambiguous exclusion clauses are construed narrowly against the party relying on them (contra proferentem).
- Under UCTA 1977, liability for death or personal injury caused by negligence cannot be excluded at all (s.2(1)); other negligence loss can be excluded only if reasonable (s.2(2)).
- UCTA's reasonableness test is judged at the time the contract was made, considering bargaining strength, inducements, and the parties' knowledge.
- In consumer contracts the Consumer Rights Act 2015 applies: a term is unenforceable if unfair (contrary to good faith and causing significant imbalance), and the key statutory quality/description rights cannot be excluded.
- The CRA transparency requirement and the indicative 'grey list' of potentially unfair terms in Schedule 2 must be checked.
- Notice of the clause must be given before or at the time of contracting, not afterwards.
Key cases & statutes
The authorities and provisions most likely to matter for this subtopic:
How it's tested in SQE1
SQE1 uses single best answer questions: a short factual scenario, one precise question, and five options of which only one is the best answer on the law applied to the facts. For exclusion clauses & unfair terms, expect to be asked what the correct legal position is, what a party may or must do, or which outcome follows — with more than one option looking arguable. Reading the facts carefully and eliminating the near-misses is the skill that earns the mark.
Where candidates lose marks
- Applying UCTA 1977 to a consumer contract, which is now governed by the Consumer Rights Act 2015.
- Thinking liability for death or personal injury from negligence can be excluded if reasonable — it cannot be excluded at all.
- Overlooking that onerous or unusual clauses need specially prominent notice to be incorporated.
Learn this subtopic in the course
A video lesson, notes and exam-style practice on exclusion clauses & unfair terms.
FAQ
Is exclusion clauses & unfair terms tested on SQE1?
Yes — exclusion clauses & unfair terms is part of the SQE1 Contract syllabus (FLK1) and can appear in single best answer questions.
How is exclusion clauses & unfair terms examined in SQE1?
SQE1 tests it by application: you're given a realistic scenario and choose the single best answer from five options. The focus is on using the law correctly, not reciting it — knowing the leading authorities (s.2 Unfair Contract Terms Act 1977, s.11 Unfair Contract Terms Act 1977) helps.