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legal alert: Limiting liability for negligence

01 Nov 2017

Limiting liability for negligence

In Goodlife Foods Ltd v Hall Fire Protection Ltd it was found that part of an exclusion clause purporting to exclude liability for death or personal injury was of no legal effect under the Unfair Contract Terms Act 1977 (“UCTA”). However, this did not invalidate the rest of the clause that was deemed reasonable and incorporated into the contract. Hall Fire was able to rely on the clause to strike out Goodlife’s negligence claim.
Facts
Goodlife brought a claim against Hall Fire in relation to a fire caused by the failure of a fire suppression system that they supplied and installed in 2002. As a contractual claim was statute barred, a negligence claim was pursued by Goodlife.
Hall Fire sought to rely on clause 11 of its standard terms and conditions, which provided “we exclude all liability, loss, damage or expense...to your property, goods, persons or the like...resulting from our negligence...or malfunction of the systems”. Goodlife argued that the clause was not incorporated due to being onerous and unusual, and the clause ought to have been reasonably brought to Goodlife’s attention.
Decision

The TCC decided the part of the clause excluding liability for personal injury or death was not permitted under section 2(1) of UCTA.  However following Trolex Products Limited v Merrol Fire Protection Engineers Ltd,although part of the clause was ineffective, it was possible that the remainder of the clause can be severed and upheld
as reasonable.
Hall Fire was successful in striking out Goodlife’s claim. The TCC concluded that the remainder of the clause was to be upheld as reasonable in accordance with Section 3 of UCTA because:
  • the parties were roughly of equal bargaining power
  • Goodlife could have sought the system from elsewhere
  • Hall Fire had made Goodlife aware they should protect themselves against failure of the system and had offered to insure Goodlife against this risk for an additional cost
  • Hall Fire undertook to make good any defects
Comment
It cannot be assumed that because part of a clause is deemed ineffective the Court will seek to exclude the whole clause. The Court will be reluctant to interfere in business to business contracts of parties of equal bargaining power, and will therefore seek to enforce the contractual terms agreed between the parties.  In this case, factors such as alerting the other party of any risks; the availability of insurance for such risks; and not excluding liability entirely, for example by agreeing to make good defects, meant the clause was deemed to be reasonable.
 

Contacts


Bal Manak | Associate

Email:
bal.manak@watsonburton.com
Tel:
0345 901 0929