Watford Electronics Ltd v Sanderson CFL Ltd [2001] EWCA Civ 317 (23 February 2001)

Watford Electronics Ltd v Sanderson CFL Ltd [2001] EWCA Civ 317 (23 February 2001)

The limitation and exclusion clauses (clauses 7.3 and 10.6) comprised two distinct terms: one excluding liability for indirect or consequential loss, and one limiting liability for direct loss to the contract price. Properly construed, these clauses did not exclude liability for pre-contractual misrepresentation, which was addressed by the entire agreement clause. The trial judge erred in treating the clauses as unreasonable in their entirety and in failing to distinguish between the two limbs. On the facts, the exclusion of indirect or consequential loss was reasonable, particularly given Watford's own use of similar clauses in its standard terms, the parties' equal bargaining power, and...

Citation
[2001] EWCA Civ 317
Parties
Claimant/respondent: Watford Electronics Limited; Defendant/appellant: Sanderson CFL Limited
Jurisdiction
England and Wales
Judgment Date
23 February 2001
Procedural Posture
Civil Appeal / Appeal From Preliminary Issues Judgment in the Technology and Construction Court
Outcome
Appeal allowed
Legal Topics
Exclusion Clauses, Limitation of Liability, Unfair Contract Terms Act 1977, Misrepresentation Act 1967, Reasonableness Test, Entire Agreement Clauses
Contract Law Commercial Law Exclusion Clauses Limitation of Liability Unfair Contract Terms Act 1977 Misrepresentation Act 1967 Reasonableness Test Entire Agreement Clauses

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Parties

Watford Electronics Limited

Claimant/respondent

Sanderson CFL Limited

Defendant/appellant

Procedural Posture

Civil Appeal / Appeal From Preliminary Issues Judgment in the Technology and Construction Court

Legal Issues

  1. 1 Whether clauses 7.3 and 10.6 excluding or limiting liability were reasonable under the Unfair Contract Terms Act 1977 and Misrepresentation Act 1967
  2. 2 Proper construction and effect of the limitation and exclusion clauses
  3. 3 Effect of entire agreement clauses on misrepresentation claims

Ratio Decidendi

The limitation and exclusion clauses (clauses 7.3 and 10.6) comprised two distinct terms: one excluding liability for indirect or consequential loss, and one limiting liability for direct loss to the contract price. Properly construed, these clauses did not exclude liability for pre-contractual misrepresentation, which was addressed by the entire agreement clause. The trial judge erred in treating the clauses as unreasonable in their entirety and in failing to distinguish between the two limbs. On the facts, the exclusion of indirect or consequential loss was reasonable, particularly given Watford's own use of similar clauses in its standard terms, the parties' equal bargaining power, and...

Court Disposition

Appeal allowed

Orders

  • Clauses 7.3 and 10.6 are effective to exclude liability for indirect or consequential loss and to limit liability for direct loss to the contract price.
  • Watford's claims for losses beyond the contract price are excluded by the contract terms.