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AEG (UK) Ltd v. Logic Resource Ltd [1996] C.L.C. 265

Contract Law – Exemption Clauses

AEG (UK) Ltd v. Logic Resource Ltd [1996] C.L.C. 265 is a key case within the contract law degree module for university LLB degree courses. The case concerns exemption clauses within and for the formation of a contract.

Facts:

Within this case the defendant received an order from customers in Iran. The defendant then sent a purchase order to the claimant for the goods. The defendant informed the claimant the goods were to be exported but did not specify Iran.

The claimant sent a confirmation back which stated certain terms as an extract, but not the full terms and conditions. The back of the document stated the full terms were available upon request. The defendant never requested nor read the entire terms and conditions. Clause 7.5, which was found only in the full terms, required the defendant to return goods upon their own request.

After delivery, the defendant’s customers in Iran notified them that the goods were defective. The defendant arranged a return via air freight and deducted the cost from the pay to the claimant, as a result the claimant then sued the defendant for the outstanding amount utilising clause 7.5.

The defendant argued against the case stating the clause was not incorporated into the contract and would be an unfair term under the Unfair Contract Terms Act 1977.

Issue:

Was the clause included in the contract and was the clause an unfair term under the UCTA1977?

Held:

The court of appeal decided for the defendant. Clause 7 acted as an exemption clause to exclude liability for certain warranties and conditions. The clause acted to exclude liability from those implied by the Sale of Goods Act 1979. As contractual terms typically cannot override statutory implications without express intent, the clause was seen as unusual and onerous. The claimant was required to give reasonable notice of the term for it to be incorporated into the contract. The claimant had failed to give this notice. Conclusively, the investigation into the fairness of the term was not necessary and was never investigated under the UCTA1977.

OSCOLA reference this article/case: Lawlessons, ‘AEG (UK) Ltd v. Logic Resource Ltd [1996] C.L.C. 265 ‘ (LawLessons, 10th August 2021) <https://lawlessons.co.uk/aeg-uk-ltd-v-logic-resource-ltd-1996-c-l-c-265> accessed 8th July 2022

Published inExemption Clauses
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