PG Paper Company Ltd: Top Legal Risks in Terms & Conditions and How to Fix Them | Erayaha

When Legal Ambiguity Costs Millions: A Case Study on PG Paper Company Ltd’s Terms & Conditions

When we examined PG Paper Company Ltd’s Terms & Conditions, our analysis revealed several high-impact legal risks that could expose the company to substantial financial losses and regulatory penalties. In today’s regulatory environment, even a single ambiguous or unenforceable clause can result in litigation costs exceeding $250,000 or regulatory fines under the UK Sale of Goods Act and EU consumer protection laws. Here, we highlight four key issues and propose actionable improvements to strengthen enforceability and reduce exposure.

1. Overbroad Exclusion of Liability: Unenforceable and Risky

The current liability clause attempts to exclude all warranties and consequential damages, except for death or personal injury. However, this blanket exclusion is likely unenforceable under the UK Unfair Contract Terms Act 1977 and could expose the company to unlimited damages in court. If challenged, such clauses often result in adverse judgments and reputational harm, with potential damages exceeding £500,000 in severe cases.

Legal Analysis

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6.1 All warranties, conditions or other terms whether regarding fitness for purpose, performance, use, quality or merchantability or otherwise of the Goods, whether express or implied, by statute (including, without limitation, sections 13 to 15 of the Sale of Goods Act 1979), common law, trade usage or otherwise howsoever, are hereby excluded only to the fullest extent permitted by law. 6.2 Except Nothing in respect ofthese Terms and Conditions shall exclude or limit liability for (a) death or personal injury caused by the Seller's negligence, the Seller shall not; (b) fraud or fraudulent misrepresentation; or (c) any other liability that cannot be liable to the Buyerexcluded or limited under applicable law. 6.2 The Seller’s liability for any consequential loss or damage (which expression shall include all loss of profit, income, use, production time, contracts and goodwill whatsoever, whether foreseeable or otherwise), costs, expenses or other claims for consequential compensation whatsoever (and whether caused byarising from the negligencesupply of Goods shall be limited to direct losses up to the Seller, its employees or agents or otherwise) which arises outvalue of or in connection with the supply of the Goods or their use or resalerelevant contract, except where prohibited by the Buyerlaw.

Legal Explanation

The original clause attempts to exclude all statutory and implied warranties and all consequential damages, which is unenforceable under the Unfair Contract Terms Act 1977 and relevant consumer protection laws. The revision clarifies permissible exclusions and limits liability to direct losses, improving enforceability and reducing the risk of unlimited damages.

2. Non-Refundable Prepayments: Consumer Law Compliance Gaps

Clause 3.5 states that all prepayments are non-refundable except in cases of the Seller’s breach. This is problematic under UK and EU consumer law, which requires fair and transparent refund policies, especially for B2C transactions. Failure to comply can lead to regulatory fines of up to 4% of annual turnover or €2 million, whichever is higher.

Legal Analysis

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3.5 Except in the event of the Seller’s breach of these Terms and Conditions, allAll payments made by the Buyer prior to the Buyer taking Delivery of the Goods shall be non-refundable in accordance with applicable consumer protection and contract laws. For the avoidance of doubtThe Seller may retain reasonable costs incurred, no breach of these Termsprovided such costs are transparent and Conditions by the Seller which is caused by the Buyer’s non-complianceagreed in advance. Any refund policy shall comply with these Termsstatutory rights and Conditions (including any failure to make payment or accept Delivery) shall requirenot unfairly disadvantage the Seller to return any such sumBuyer.

Legal Explanation

The original clause makes all prepayments non-refundable except for Seller breach, which is likely unenforceable and non-compliant with UK and EU consumer law. The revision ensures compliance with statutory refund rights and provides transparency, reducing regulatory and litigation risk.

3. Restriction on Rejection of Goods: Contradicts Statutory Rights

Clause 4.3 denies the Buyer the right to reject goods, even in cases of non-conformity. This directly conflicts with the UK Sale of Goods Act 1979 and Consumer Rights Act 2015, which guarantee the right to reject faulty or misdescribed goods. Ignoring statutory rights can trigger class actions and regulatory scrutiny, with potential liabilities in the hundreds of thousands.

Legal Analysis

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4.3 The Buyer is not entitled to reject the Goods. If that do not conform to the quantity or quality of Goods delivered is incorrectcontract, then a proincluding cases of non-rata adjustment shall be made toconformity, defect, or misdescription, in accordance with the invoice by the Seller to reflect the quantitySale of suitable Goods actually deliveredAct 1979 and Consumer Rights Act 2015. Where appropriate, the Buyer may request a replacement, repair, or refund.

Legal Explanation

The original clause denies the Buyer’s statutory right to reject non-conforming goods, which is void under UK law. The revision restores these rights, ensuring compliance and reducing the risk of regulatory action or class actions.

4. Unilateral Amendment of Prices: Lack of Mutuality and Certainty

Clause 2.4 allows the Seller to revise prices unilaterally with written notice. This lack of mutual agreement undermines contract certainty and may be deemed unfair or void under contract law principles. Disputes over pricing adjustments are a leading cause of commercial litigation, often resulting in settlement costs exceeding £100,000.

Legal Analysis

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2.4 The Seller reserves the right to revise Proforma Invoice/Sales Orders. Prices in Proforma Invoice/Sales Orders aremay only subject to change uponbe revised by mutual written notice from the Seller. These includeagreement of both parties, butexcept where changes are not limiteddue to government-imposed taxes or surcharges. Any price adjustment must be reasonable, fueltransparent, freight and haulage surchargescommunicated in advance.

Legal Explanation

The original clause allows unilateral price changes by the Seller, undermining contract certainty and mutuality. The revision requires mutual agreement for price changes, reducing the risk of disputes and litigation.

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Conclusion: Protecting Your Business from Preventable Legal Risks

Our analysis shows that PG Paper Company Ltd’s current T&Cs contain several high-severity risks that could expose the company to litigation, regulatory fines, and reputational damage. Proactive redrafting of these clauses not only ensures legal compliance but also builds trust with partners and customers.

**Are your contracts exposing you to unnecessary risk? What would a regulatory audit reveal about your terms? How much could you save by proactively managing legal compliance?**

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*This analysis is for educational purposes only and does not constitute legal advice. For actual legal guidance, consult with a licensed attorney. This assessment is based on publicly available information and professional legal analysis. Please refer to erayaha.ai’s terms of service regarding liability limitations.*