UK: UCTA reasonableness test may apply even where contract is only partly on standard terms

The High Court has found that the requirement of reasonableness imposed by the Unfair Contract Terms Act 1977 (UCTA) can apply in circumstances where a party's written standard terms and conditions are incorporated only in part and other terms are tailor made: Commercial Management (Investments) Limited v Mitchell Design and Construct Limited and another [2016] EWHC 76 (TCC).

The UCTA reasonableness test applies to (among other things) any attempt to exclude or restrict liability for breach of contract where one party deals "on the other's written standard terms of business". Parties may assume that the test is not engaged in the context of a contract made between two commercial parties where certain of the terms have been negotiated and others are in standard form.

However, this decision makes it clear that it is not necessary for the full suite of a party's standard written terms and conditions to be incorporated into a contract before UCTA will apply. This means that more exclusion clauses may be open to challenge on grounds of reasonableness than might generally have been assumed. Sarah Boland, a senior associate in our dispute resolution team, considers the decision further here.