Lloyd's Maritime and Commercial Law Quarterly
INTERPRETATION, SEVERANCE AND POLICY AND THE UNFAIR CONTRACT TERMS ACT
Stewart Gill v. Horatio Myer
Introduction and facts
The Unfair Contract Terms Act 19771 has engendered a slow but increasingly steady stream of interesting decisions focusing on the elucidation of its oftimes obscurely phrased statutory language.2 The recent Court of Appeal decision of Stewart Gill Ltd. v. Horatio Myer & Co. Ltd
3 is yet another in this series of cases, raising not only interesting problems of interpretation centring on the (statutory) scope of exception clauses as embodied within s. 13 of the Act but also broader issues pertaining to the severability within clauses in the context of the test of reasonableness, the (indirect) emphasis on the time at which this test is to be applied, and the desirability of an express reference to policy factors underlying the statute itself.
Briefly stated, the facts of the Stewart Gill case were as follows. The defendant purchasers entered into a contract with the plaintiff vendors for the acquisition of an overhead conveyor system, the price of which was to be settled via progress payments. Owing to disputes, however, the defendants refused to pay the remaining 10% of the purchase price, thus resulting in the plaintiffs’ present action for summary judgment. The defendants cross-claimed, alleging breaches by the plaintiffs themselves, which claims allegedly overtopped the plaintiffs’ and which were thus claimed as a set-off against the latter. The plaintiffs, in an attempt to counter the effect of the cross-claims, relied upon the following clause, the interpretation of which constituted the nub of the instant case:
The Customer shall not be entitled to withhold payment of any amount due to the Company under the Contract by reason of any payment credit set off counterclaim allegation of incorrect or defective Goods or for any reason whatsoever which the Customer may allege excuses him from performing his obligations hereunder.4
The trial judge found in favour of the defendants, allowing them unconditional leave to defend the action. Because of the crucial part s. 13 played in the instant case, it is set out as follows:5
13. Varieties of exemption clause.
(1) To the extent that this Part of this Act prevents the exclusion or restriction of any liability it also prevents—
(a) making the liability or its enforcement subject to restrictive or onerous conditions;
(b) excluding or restricting any right or remedy in respect of the liability, or subjecting a person to any prejudice in consequence of his pursuing any such right or remedy;
(c) excluding or restricting rules of evidence or procedure;
1. Hereafter “the Act”.
2. For a relatively recent decision (at first instance) turning on, inter alia, the construction of s. 10 of the Act, see Tudor Grange Holdings Ltd. v. Citibank N.A. [1992] Ch. 53, 65–67; Hooley [1991] LMCLQ 449.
3. [1992] 1 Q.B. 600.
4. Emphasis added.
5. Emphasis added.
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