This is a useful decision of the Court upholding the application of a broadly drafted clause excluding property damage liability in negligence on the part of a supplier of a fire prevention mechanism which failed.
C produced pre-packaged meals and contracted D to supply a fire suppression system in its factory. A section of pipework in the system failed causing a fire originating in C’s industrial frying machine. C sued D in negligence.
D relied on a clause in its standard terms and conditions attached to its quotation which purported to exclude: “all liability, loss, damage, or expense consequential or otherwise caused to your property, goods, persons or the like… resulting from negligence… or malfunction of the systems…. In the case of faulty components, we include only for the replacement, free of charge, of those defective parts…”
C argued this failed to satisfy the requirement for reasonableness under s2 Unfair Contract Terms Act 1977 (“UCTA”), in particular that it was too broad in its application. Further it was argued that it had not properly been incorporated as adequate attention had not been drawn to it. C also sought to amend its Particulars of Claim to include a claim for breach of statutory duty under s41(1) Electrical Equipment (Safety) Regulations 1994, arguing that the system was “electrical equipment”. These issues fell to be determined by the Court at a preliminary issue hearing.
HHJ Stephen Davies held:
- D’s standard terms and conditions (including the exclusion clause) had been incorporated into the contract by reference in D’s quotation.
- Insofar as the exclusion clause purported to exclude liability for personal injury or death, it was invalid under s2(1) UCTA. This did not, however, mean that the remainder of the exclusion clause was also invalid: Trolex Products v Merrol Fire Protection Engineers Limited (20 November 1991) (CA) applied.
- The Terms and Conditions made it clear that D would not be willing to provide insurance and the exclusion clause made it clear to the reader that D was not liable for damages. The parties were of roughly equal bargaining position. It was reasonable that C should have been expected to be insured against the loss to which the exclusion clause was directed. The exclusion clause was, therefore, reasonable and upheld as valid.
- The pipework itself was not electrical equipment and the proposed amended claim had no prospect of success so the application to amend was dismissed.
Judgment for the Defendant.
You can access the full Judgment here.