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he principals activities, despite the fact that the agent is a separate undertaking'. If the agent accepts such risks, is considered as an independent dealer, and the agreement is infringing article 81(1).
Paragraph 16 provides that 'the question of risk must be assessed on a case by case basis'. Where the property of the goods does not vest in the agent, or where the agent does not supply the contract services, Article 81(1) will not be applicable. Article 16 has a 'non exhaustive' list (Article 17) of indications where an agent is not accepting those risks.
The application of the vertical guidelines has been considered on a number of cases such as Bundeskartellamt v. Volkswagen AG and VAG Leasing GmbH where it was held that agents could not be regarded as genuine agents if they form an integral part of its turnover as independent manufacturers of products. The dealers bore part of the financial risks of leasing vehicles and carrying out their sales and after sales business independently.
Conclusion
If Jonathon wants to appoint an agent, he has to consider the advantages and disadvantages of appointing an agent and is better to make a genuine agency agreement where Article 81(1) does not apply. Under Paragraph 18 of the Guidelines, where the agency is genuine, the agreement does not fall within the scope of Article 81(1) and all obligations on the agent will fall outside Article 81(1). Jonathon can define the scope of agent's activity without passing him any financial or commercial risk, which is the determining factor in assessing whether Article 81(1) is applicable.
Question two
Introduction
Many contracts contain exclusion clauses, by which a party seek to exclude or limit, liability for breaches, or other liability arising by the contract. Section 55 of the Sale of Goods Act 1979 states that the parties are free to exclude the terms implied by the Act to a sale of goods contract, subject to the Unfair Contract Terms Act (UCTA) 1977.
The party wishing to rely on an exclusion clause has to prove that the clause was incorporated into the contract and covers the loss which has been suffered. In Scheps v Fine Art Logistic, Teare, J held there was no evidence that the plaintiff had knowledge of the terms of the defendant, and the defendant never gave a copy of the terms. Therefore, the terms were not incorporated into a contract as the party seeking to rely on.
A party whose terms are used can rely upon reasonable exclusion clauses if the contract is concluded on written standard terms of business, or with a consumer. Guidelines to the operation of the reasonableness test can be found in UCTA 1977 and from case law.
The requirement of reasonableness
Section 11(1) of the UCTA states that 'the term shall have been a fair and reasonable one to be included having regard to the circumstances which were, or ought reasonably to have been, known to or in the contemplation of the parties when the contract was made'. The onus of proving that a term is reasonable is on the party seeking to benefit from that term.
The requirement of reasonableness applies to terms excluding liability for negligence. It also applies when the buyer is not a consumer if the exclusion clause relates to the implied conditions in sections 13-15 of the UCTA and to contracts where they are on one
