Unfair Contract Terms Act: UCTA in Singapore

Last updated on January 19, 2024

The Unfair Contract Terms Act (referred to as UCTA by business and legal insiders) is a body of law designed to primarily protect consumers who may be prejudiced by the weaker bargaining positions they occupy in most consumer transactions.

More generally, the preamble to UCTA reads as follows:

“An Act to impose further limits on the extent to which civil liability for breach of contract, or for negligence or other breach of duty, can be avoided by means of contract terms and otherwise”.

Negligence Liability: Section 2 of UCTA

UCTA prohibits a person from using a contract term or notice to exclude his own liability for negligent acts causing death or personal injury to another. For instance, an amusement park operator is unable to rely on a signboard disclaiming liability for rollercoaster failure leading to personal harm to the visitor.

In contrast, for loss or damage beyond death or personal injury, exclusion clauses are valid insofar as they are reasonable. UCTA itself defines reasonableness – see below at Glossary.

Contractual Liability: Section 3 of UCTA

In the case of a consumer dealing with a business entity, if the transaction is entered into using the latter’s standard form (for instance, when you sign up with a telco on their standard contract), section 3 applies. This section disallows the business from using its standard contractual terms to:

  1. Exclude or limit its own liability for breaches of terms; and
  2. Relying on a term to render a different kind of service from that which was reasonably expected of him, or not service at all,

unless the standard contractual term is reasonable.

Indemnity Clauses: Section 4 of UCTA

Additionally, section 4 applies to protect consumers from being made to indemnify another person in respect of liability that may be incurred by the other for negligence or breach of contract, except in so far as the contract term satisfies the requirement of reasonableness.

For instance, this could apply in the case of a loan guarantee – whether an indemnity clause is reasonable would depend on the usual banking practice in the industry.

Consumer Products: Section 5 of UCTA

Consumer products are generally products used for private consumption, as opposed to business use. For instance, a bottle of Yakult is a consumer product.

The manufacturer or retailer cannot rely on a term or notice (usually printed on the product itself) to exclude liability for product defect or negligent manufacturing or distribution.

Sale and Hire-Purchase: Section 6 of UCTA

Various liabilities for breach of the obligation in a sale and hire-purchase contract cannot be excluded or restricted. For more details, do refer to section 6 of UCTA. These obligations include, in general, implied assurances that:

  • The seller or owner that he has good title to the goods
  • The goods in question are of good quality
  • The goods are usable for their general purpose
  • The goods conform to their marketing descriptions

Goods that Require Transfer of Possession or Ownership: Section 7 of UCTA

Similarly, section 7 of UCTA imposes restrictions on the use of contractual clauses to exclude or limit liability in certain situations concerning contracts transferring possession or ownership.

Similar to section 6, section 7 is designed to protect the party from unreasonable terms that take away that party’s rights, such as the implied assurances mentioned above.

Special Contracts

Certain contracts, such as contracts for insurance, do not fall within the purview of the UCTA. These limitations are outlined in the First Schedule of UCTA.

Glossary

  1. Reasonableness: Section 11 provides that whether a term is fair and reasonable depends on the circumstances which were, or ought reasonably to have been, known to or in the contemplation of the parties when the contract was made. Hence, the context must be consulted to determine whether a term is reasonable.
  2. Consumer: Generally, a person is a consumer if he does not enter into the transaction for business, while the other party does so. See section 12 for more details on the definition.
  3. Excluding liability: This refers to the use of a contract term or notices to protect a party, so much so that he is not at all liable to pay compensation or give the performance, when he, for instance, breaches the contract or acts negligently.
  4. Limiting or restricting liability: This is similar to the exclusion of liability. It refers to the use of a term or notice to limit the extent of his liability. For instance, an amusement park operator may attempt to rely on a notice to cap his liability for rollercoaster failure to a quantum of $100,000 as compensation payable to a victim.
Legal and Contractual Rights When Making a Purchase
  1. Price Transparency Guidelines by CCCS (With Examples)
  2. Your Consumer Rights in Singapore and How to Get Recourse
  3. Can silence amount to acceptance of a contract?
  4. Unfair Contract Terms Act: UCTA in Singapore
  5. When Can I Void a Contract For Misrepresentation?
  6. Making Lemon Law Claims for Defective Items in Singapore
  7. Hire-Purchase Agreement: Your Rights and Repossession of Goods in Singapore
Buying a Car in Singapore
  1. Consumer Rights in Singapore
  2. Buying a Car in Singapore: A Comprehensive Guide
  3. Disputes with Car Dealers: What Are My Options?
F&B-related Matters
  1. Food Poisoning in Singapore: Who Can I Sue?
  2. Do I have to pay the 10% service charge in restaurants?
  3. Can I refuse to pay restaurants for lousy food or service?
  4. “Certified Organic” Food in Singapore: What Does It Mean?
Online Purchases
  1. Buyer Beware! What to Do If You are a Retail Scam Victim
Specific Consumer Matters
  1. Is It Legal to Own Gold Bars or Bullions in Singapore?
  2. Victim of Hard Selling Sales Tactics in Singapore: What to Do
  3. Misled by an Advertisement? Here’s What You Can Do
  4. Missing Parcel? Here’s What You Can Do
  5. Delayed or Missing Baggage While Travelling? Here's What You Can Do
  6. What Can I Do If a Shop Vendor Sells Me a Grossly Overpriced Product?
  7. What Can You Do if You Were Sold a Defective Product in Singapore?
  8. Counterfeit Goods: Is it Illegal to Sell or Buy Them in Singapore?
  9. How to Get Back Your Money from a Company That’s Closing Down in Singapore
  10. Is Ticket Scalping Legal in Singapore? Risks Faced by Buyers/Sellers
  11. Am I liable for the charges if my credit card is stolen?
  12. I pawned a piece of jewellery to a pawnshop. What are my rights as a pawner?