The Unfair Contract Terms Act 1977 applies to commercial contracts such as in this situation. It divides exclusion clauses into two types; those that are void and those that are valid only as far as they are reasonable. Under s2, liability for personal injury or death due to negligence may never be excluded. An exemption for loss due to negligence in other circumstances will be valid only insofar as it is reasonable. Reasonableness is to be considered with reference to the parties' obligations of skill and care.
(i) The exclusion clause seeking to exempt Hazelwood Ltd from liability for the damage to Andy's truck will only be valid if it is reasonable. Courts will take into account all the circumstances that were known, or ought to have been known by the parties when the contract was made and it will be up to Hazelwood Ltd to prove that the clause was reasonable. The company would be unlikely to succeed in avoiding liability for damage to Andy's truck since it is reasonable to expect its driver not to be negligent in operating such a tow vehicle. Andy can claim damages.
(ii) Taking into account s2 of UCTA 1977, Hazelwood Ltd would not be able to rely on the exclusion clause to avoid liability for the injuries to Andy that arose from its negligence due to the actions of the towing vehicle's driver. Andy can claim damages.
