Almost any company which has terms and conditions of business will want to limit its liability for claims from its clients or customers. The precise wording of a limitation clause needs careful consideration, not least so as not to fall foul of legislation such as the Unfair Contract Terms Act.
A useful article on the subject has just been published by Bristows Law Firm. This deals with a case where Regus, who let out serviced offices, had a dispute with one of their tenants over the air-conditioning. The Court of Appeal decided that Regus’ Terms, which excluded liability for loss of business, loss of profits and any consequential loss were not, in the circumstances unreasonable as the tenant had claimed.
However the Court also decided that the real loss suffered by the tenant was the reduction in value of the premises due to the inadequate airconditioning and, in spite of the very wide exclusion clause, the wording did not exclude liability for this type of loss, so the tenant could recover some damages.
Useful tips offered by Bristows as a result of this case:
-Review exclusion and limitation of liability clauses regularly - no business can afford to be complacent about their enforceability.
-Ensure drafting is clear and unambiguous.
-Avoid depriving a party of any remedy for your breach of contract - a Court is likely to consider this to be unreasonable. However, it seems that the general practice of excluding financial losses such as loss of profits and consequential losses will not be unreasonable per se.
-Remember that the question of reasonableness is entirely dependent on the individual facts of each case - a clause which is considered to be reasonable in one dispute, might not be in another.
For the full article go to http://www.bristows.com/?pid=46&level=2&nid=1151
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