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The "Reasonableness" Test

Volume 931: debated on Friday 6 May 1977

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I beg to move Amendment No. 33, in page 11, line 14, leave out '(a)'.

This amendment is intended to clarify Clause 22 rather than to change its substance. As it stands, subsection (1) is intended to make two provisions: first, that in applying the "reasonableness" test regard is to be had only to the circumstances which were or should have been known to or in the contemplation of the parties at the time that the contract was made; and, secondly, that in determining matters of fairness or reasonableness relating to Clauses 19 and 20 regard is to be had in particular to the guidelines set out in Schedule 2.

However, the placing of the word "only" before paragraph (a) suggests that it is intended to govern both paragraphs (a) and (b) and consequently, in relation to paragraph (b), that a court or arbiter—that is the Scottish equivalent of" arbitrator—would be debarred from considering the circumsatnces mentioned in paragraph (a) except in so far as they fall within the Schedule 2 guidelines. That restriction was not intended. The amendment restores the position by making it clear that a court or arbiter should have regard to those circumstances and, in particular, to the guidelines. I hope that the amendments will be approved.

Amendment agreed to.

Amendments made: No. 34, in page 11, line 17, leave out from 'made' to shall 'in line 20 and insert—

(2) In determining for the purposes of section 19 or 20 of this Act whether it was fair or reasonable to incorporate a term in a contract, regard shall be had in particular to the matters specified in Schedule 2 to this Act; but this subsection.'—[The Lord Advocate.]

No. 35, in page 11, line 24, leave out 'not'.—[ Mr. Ward.]