XN000022-1986-12-11 — Page 3

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THURSDAY, DECEMBER 11,.1986

+THE OBJECTION HAS NO VALIDITY WHERE THERE IS NO REAL POSSIBLITY OF NEGOTIATING CONTRACT TERMS, OR WHERE A PARTY IS NOT EXPECTED TO READ A CONTRACT CAREFULLY OR TO UNDERSTAND ITS IMPLICATIONS WITHOUT LEGAL ADVICE,

+ IT IS ONLY IN THOSE CIRCUMSTANCES THAT WE BELIEVE THAT LEGISLATIVE INTERVENTION IS JUSTIFIED.+

THE COMMISSION SAID IT SHARED THE VIEW OF THE ENGLISH AND SCOTTISH LAW COMMISSIONS AND OF THE LEGISLATURES OF SEVERAL COMMONWEALTH JURISDICTIONS THAT IN MANY CASES EXEMPTION CLAUSES OPERATED AGAINST THE PUBLIC INTEREST.

+WE BELIEVE THAT THE PREVAILING JUDICIAL ATTITUDE OF SUSPICION, IF NOT HOSTILITY, TO SUCH CLAUSES IS WELL FOUNDED. IT REPORTED.

+FROM THE RESPONSES RECEIVED FROM THOSE WHO WERE CONSULTED, WE ARE LEFT IN NO DOUBT THAT THE MISUSE OF THESE CLAUSES IS OBJECTIONABLE,

+SOME ARE TOTALLY UNJUSTIFIED. OTHERS MAY OPERATE FAIRLY OR UNFAIRLY, EFFICIENTLY OR INEFFICIENTLY, DEPENDING ON THE CIRCUMSTANCES.+

IF THE COMMISSION'S PROPOSALS WERE MADE LAW, EXEMPTION CLAUSES IN TWO SPECIFIC CATEGORIES OF TRANSACTION WOULD BE CONTROLLED. FIRSTLY, CONSUMER TRANSACTIONS, WHERE ONE PARTY DEALS AS CONSUMER AND THE OTHER DEALS IN THE COURSE OF A BUSINESS; AND SECONDLY, STANDARD FORM CONTRACTS, WHERE ONE PARTY DEALS ON THE OTHER PARTY'S STANDARD TERMS OF BUSINESS.

STANDARD FORM CONTRACTS ARE CHARACTERISED BY THE ABSENCE OF NEGOTIATION IN MOST SITUATIONS WHERE THE OFFER IS MADE TO A CUSTOMER ON A +TAKE IT OR LEAVE IT+ BASIS.

UNDER THE PROPOSALS, THE USE OF EXEMPTION CLAUSES WOULD NOT BE PROHIBITED BUT IT WOULD BE CONTROLLED IN TWO WAYS: EITHER THE CLAUSES WOULD HAVE NO EFFECT AT ALL OR THEY WOULD BE EFFECTIVE ONLY TO THE EXTENT THAT A COURT WAS SATISFIED THAT THE CLAUSE WAS REASONABLE,

THE FOLLOWING TERMS AND NOTICES WOULD BE ABSOLUTELY INEFFECTIVE:

(A)

(B)

THE EXCLUSION OR RESTRICTION OF LIABILITY FOR DEATH OR PERSONAL INJURY RESULTING FROM NEGLIGENCE:

THE EXCLUSION OR RESTRICTION OF LIABILITY CONTAINED IN A +GUARANTEE+ ATTACHED TO CONSUMER GOODS WHERE LOSS OR DAMAGE IS CAUSED BY THE NEGLIGENCE OF THE MANUFACTURER OR DISTRIBUTOR AND ARISES FROM THE GOODS PROVING DEFECTIVE WHILE IN CONSUMER USE;

/(C)

IN ANY