UNFAIR CONTRACT TERMS ACT

Arrangement of Sections

1. Short title.

2. Application.

3. Avoidance of liability for negligence.

4. Avoidance of liability for contract.

5. Unreasonable indemnity clauses.

6. Guarantees.

7. Sale and Hire Purchase.

8. Effect of breach.

9. Evasion by means of secondary contracts.

10. Reasonableness Test.

11. Extent of exemption clauses.

12. Sinhala text to prevail in case of inconsistency.

13. Interpretation.

SCHEDULES

26 of 1997.

AN ACT to impose limits on the extent to which civil liability for breach of contract, or for negligence or other breach of duty, can be avoided by means of contract terms and otherwise; and to provide for matters connected therewith or incidental thereto.

[Date of Commencement: 17th October, 1997]

1. Short title.

This Act may be cited as the Unfair Contract Terms Act.

2. Application.

(1) Nothing in sections 3, 4 and 5 shall apply to, or in relation to, a contract specified in the First Schedule to this Act.

(2) The provisions of sections 3, 4, 5 and 6 shall apply only to business liability and the references to liability in those sections shall be construed accordingly.

3. Avoidance of liability for negligence.

(1) A contract term or a notice given to persons generally or to particular persons which purports to exclude or restrict or has the effect of excluding or restricting, a person's liability for death or personal injury resulting from negligence shall be of no effect.

(2) A contract term or notice given to persons generally or to particular persons which purports to exclude or restrict or has the effect of excluding or restricting, a person's liability for any other loss or damage resulting from negligence shall have effect only in so far as such contract term or notice satisfies the requirement of reasonableness.

(3) Where a contract term or notice purports to exclude or restrict or has the effect of excluding or restricting, liability for negligence, a person's agreement to such contract term or awareness of such notice shall not itself be taken as constituting his acceptance of any risk.

4. Avoidance of liability for contract.

(1) This section applies as between parties to a contract where one of the parties deals as consumer or on the other's written standard terms of business.

(2) As against that party the other cannot by reference to any contract term—

(a) when himself in breach of contract, exclude or restrict any liability of his in respect of that breach; or

(b) claim to be entitled—

(i) to render a contractual performance substantially different from that which was reasonably expected of him under the contract; or

(ii) in respect of the whole or any part of his contractual obligation, to render no performance at all,

except in so far as (many of the cases mentioned in this subsection) the contract term satisfies the requirement of reasonableness.

5. Unreasonable indemnity clauses.

(1) A contract term which purports to impose on a person dealing as consumer an obligation to indemnify any other person (whether a party to the contract or not) in respect of liability that may be incurred by such other person for negligence or breach of contract shall have effect only in so far as such contract term satisfies the requirement of reasonableness.

(2) This section applies whether the liability referred to in subsection (1)—

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