Newsletter 64

Monday 2 December 2024

Your weekly SQE Prep Quiz has arrived

Dear Subscriber,

I hope you had a great weekend. Please see below for the question, the answer to the previous question and associated resources. This is the web version of this newsletter.

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Question: Rachel is a law student studying the structure of the English legal system. She is particularly interested in understanding how cases progress through the court hierarchy and the role of precedent in shaping decisions. Her professor asks her to explain how a decision made by the Court of Appeal (Civil Division) would affect future cases and under what circumstances the Court of Appeal is bound by its own previous decisions. Which of the following best explains the role of the Court of Appeal (Civil Division) in the English legal system and its relationship with precedent?

1. The Court of Appeal (Civil Division) is not bound by its own previous decisions and may freely overrule them whenever it disagrees with earlier judgments.
2. The Court of Appeal (Civil Division) is bound by its own previous decisions unless there is a conflict between two prior decisions or the decision has been overturned by the Supreme Court.
3. The Court of Appeal (Civil Division) is only bound by decisions of the High Court and the Supreme Court but has complete discretion to overrule its own judgments.
4. The Court of Appeal (Civil Division) is bound by its own previous decisions, but it can overrule them when it disagrees with the reasoning of the earlier court.
5. The Court of Appeal (Civil Division) is not bound by precedent and can decide each case solely on the basis of fairness and justice.

Study Material: For more on the English Legal System see the video linked here.

Free Study Planner: You can download our SQE1 Study Planner for the July 2025 exam by clicking here.

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Answer and feedback to last week’s question: LuxeStay Ltd. is a luxury vacation rental company that contracts with property owners to manage and rent out their homes to high-end clients. As part of its agreement with property owners, LuxeStay Ltd. includes a clause in its standard terms and conditions stating that it will not be liable for any damage caused to the property by renters. Sarah, a property owner who signed this agreement, discovers that one of the renters, a client arranged by LuxeStay Ltd., caused extensive damage to her home during a stay, including smashed furniture, ruined carpets, and broken windows. The repair costs total £25,000. Sarah claims that LuxeStay Ltd. failed to vet the renter properly and is therefore liable for the damage. When Sarah demands compensation, LuxeStay Ltd. points to the exclusion clause in the agreement and refuses liability. Which of the following legal principles or laws is most likely to determine the enforceability of the exclusion clause in this scenario, and what key factors will the court consider?

1. The Consumer Rights Act 2015; the court will automatically void the exclusion clause as unfair, as it limits liability for damage to property.
2. The Unfair Contract Terms Act 1977; the court will consider whether the exclusion clause is reasonable, taking into account a number of factors, including the parties’ bargaining power.
3. The principle of vicarious liability; the court will assess whether LuxeStay Ltd. can be held liable for the actions of its renters.
4. The principle of freedom of contract; the exclusion clause will be upheld because Sarah willingly signed the agreement.
5. The principle of frustration; the court will determine whether the damage to the property made the contract impossible to fulfill.

Correct Answer: 2. The Unfair Contract Terms Act 1977; the court will consider whether the exclusion clause is reasonable, taking into account a number of factors, including the parties’ bargaining power. Feedback: The enforceability of the exclusion clause will be assessed under the Unfair Contract Terms Act 1977 (UCTA), which regulates the use of exclusion clauses in business contracts. Under UCTA, exclusion clauses that seek to limit or exclude liability for negligence are subject to a reasonableness test. The court will consider several factors, as laid out in s.11 of the Act, and the information in Schedule 2. Option 1 is incorrect because the Consumer Rights Act 2015 (CRA) primarily applies to consumer contracts. Sarah, as a property owner contracting with LuxeStay Ltd., will not qualify as a consumer under CRA definitions, making UCTA the relevant statute. Option 3 is incorrect because vicarious liability applies to situations where an employer is held responsible for the actions of employees, not independent third-party renters. Option 4 is incorrect because freedom of contract is not absolute; statutory protections like UCTA limit the enforceability of exclusion clauses in cases of negligence or unfairness. Option 5 is incorrect because frustration applies to events that render performance of a contract impossible or radically different, which is not relevant to the issue of property damage and exclusion clauses. Thus, the court will most likely apply UCTA to assess whether the exclusion clause is reasonable, considering LuxeStay Ltd.’s obligations and the fairness of the contractual terms. If deemed unreasonable, the clause may be struck out, and LuxeStay Ltd. could be held liable for the damage.

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All the best

Dr Ioannis Glinavos