The assumption that fails
Much exclusion-clause analysis assumes UCTA applies because the contract is governed by English law. For cross-border deals that assumption can be wrong. Section 27(1) of UCTA provides that where English law applies only because the parties chose it - and the contract would otherwise be governed by the law of a country outside the UK - UCTA's main controls (sections 2 to 7) do not operate.
Those are UCTA's own teeth: the controls on excluding negligence liability (section 2) and the reasonableness test for standard terms (section 3). When section 27(1) bites, those controls do not apply. The reasonableness test for excluding misrepresentation is separate - it sits in section 3 of the Misrepresentation Act 1967, which section 27(1) does not list - so its position on an international deal is a distinct question: it can fall away for an international supply contract under section 26, but that is a separate analysis to take advice on, not a consequence of section 27(1).
The test: what law would naturally govern
The question is whether, ignoring the choice-of-law clause, the contract would naturally be governed by English law based on its closest and most real connection - where the parties are, where it is performed, where goods are delivered or services rendered. If the natural governing law is English, UCTA applies. If the natural governing law is foreign and English law was bolted on by choice, section 27(1) can switch UCTA off.
So two contracts with identical "governed by English law" clauses can have opposite UCTA outcomes: the genuinely English deal keeps the reasonableness test; the genuinely foreign deal that merely chose English law does not.
Worked examples
Consider a contract between a French subsidiary and a German subsidiary, negotiated abroad, with goods made in Italy and delivered in Germany, stating it is governed by English law. English law is chosen artificially, so section 27(1) applies and exclusion clauses can be enforceable even if they would fail UCTA reasonableness. Contrast a UK company selling to a French company, goods made and shipped from the UK, governed by English law: here English law would naturally govern, so UCTA applies and the exclusions must be reasonable.
The label is identical; the connection to the UK is what differs - and what decides UCTA's reach.
The anti-avoidance rule, section 27(2)
Section 27 cuts the other way too. Under section 27(2), UCTA will apply despite a foreign-law choice if the choice appears to have been imposed wholly or mainly to evade UCTA. So two UK parties performing wholly in the UK cannot escape UCTA by writing "governed by Cayman Islands law" on their standard terms - a court will apply UCTA anyway.
The provision targets artificial avoidance in both directions: you cannot bolt on English law to gain protections you should not have, nor bolt on foreign law to dodge protections you should.
What survives, and what to do
Even where section 27(1) removes UCTA, common-law protections remain: you still cannot exclude fraud or death or personal injury from negligence, clauses must be clear, and ambiguity is read against the party relying on the clause. But these are weaker than UCTA's reasonableness control.
Practically, for any cross-border deal work out the natural governing law before relying on UCTA. Buyers wanting UCTA protection should ensure the deal genuinely connects to the UK, and can recite that connection; sellers content to do without it should document the genuine international elements. Do not let an English-law clause lull you into assuming the reasonableness test will save you.
Use at the desk
Practical checklist
- Do not assume an English-law clause means UCTA applies (section 27(1) UCTA 1977).
- Work out what law would naturally govern from the deal's closest connection before relying on UCTA.
- On international contracts, treat the UCTA reasonableness test as possibly unavailable for your exclusions.
- Remember the anti-avoidance rule: a foreign-law choice mainly to evade UCTA will not work (section 27(2)).
- Note what survives regardless: no excluding fraud or death or personal injury, clarity, and contra proferentem.
- Buyers wanting UCTA: ensure and recite a genuine UK connection; sellers: document genuine international elements.
This guide is informational only and is not legal advice. It does not replace advice from licensed counsel on the facts of a specific transaction.
Product demo
Use the guide for context. Use Veqtor for the Word documents.
Watch Claude compare negotiation drafts and create a separate Word document with proposed tracked changes.
See Veqtor work with Word redlines