How satisfactory is the current law on contractual terms? Consider what reforms might improve the law. You may relate your answer to terms in general, or to terms excluding or limiting liability, or to a combination of both.

The current law on contractual terms succeeds in supporting commercial certainty, yet lacks the flexibility required to effectively regulate unfair contracts in a commercial context. Through discussing the incorporation of contractual terms, the Consumer Rights Act 2015 and the Unfair Contract Terms Act 1977, this essay will demonstrate that while the law is satisfactory in a consumer context, further flexibility would be beneficial for interpreting contractual terms in commercial contracts.

The incorporation of terms is one aspect of contract law which aids commercial certainty. L’Estrange v Graucob (CA) established that, in the absence of fraud or misrepresentation, when a document containing contractual terms is signed the party is bound by those terms, irrespective of whether they have read the document. This objective determination provides certainty for contracting parties, while also discouraging potentially costly litigation to determine the subjective minds of the parties at the time of contracting. Importantly, both of these factors encourage commerce, which is one of the main objectives of commercial law. While it could be argued that the strictness of this rule prevents judicial flexibility in the face of unfair contract terms, Atiyah highlights that any deviation from the rule in l’Estrange would drastically reduce the perceived ‘value’ of a signature. Therefore, it is suggested that a better solution would be that the rule in l’Estrange is be maintained, but that courts should have greater flexibility in interpreting individual contractual terms. An objective approach can also be seen Thompson v LMS Railway, wherein one of the parties was illiterate. The Court of Appeal held it was not necessary to give actual notice of a clause, but only that it is necessary to take reasonable steps to bring the clause to the attention of a reasonable person. This a significantly lower burden on contracting parties. Therefore, it is clear that the current law on the incorporation of terms is satisfactory in ensuring commercial certainty and ease of commerce.