Overseas Medical Supplies Ltd v Orient Transport Services Ltd [1999] EWCA Civ 1449 (20 May 1999)

Overseas Medical Supplies Ltd v Orient Transport Services Ltd [1999] EWCA Civ 1449 (20 May 1999)

The limitation of liability clause was not reasonable under the Unfair Contract Terms Act 1977 as applied to the failure to arrange insurance, given the lack of real bargaining equality, insufficient clarity and consent to the limitation, and the one-sided effect depriving the plaintiffs of both goods and insurance for derisory compensation. The appellants failed to discharge the burden of proving reasonableness.

Citation
[1999] EWCA Civ 1449
Parties
Respondent/plaintiff: Overseas Medical Supplies Limited; Appellant/defendant: Orient Transport Services Limited
Jurisdiction
England and Wales
Judgment Date
20 May 1999
Procedural Posture
Civil Appeal / Appeal From County Court Judgment
Outcome
Appeal dismissed
Legal Topics
Limitation of Liability, Unfair Contract Terms Act 1977, Reasonableness of Exclusion Clauses, Freight Forwarding Contracts, Insurance Obligations in Carriage of Goods
Contract Law Commercial Law Limitation of Liability Unfair Contract Terms Act 1977 Reasonableness of Exclusion Clauses Freight Forwarding Contracts Insurance Obligations in Carriage of Goods

Case Brief

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Parties

Overseas Medical Supplies Limited

Respondent/plaintiff

Orient Transport Services Limited

Appellant/defendant

Procedural Posture

Civil Appeal / Appeal From County Court Judgment

Legal Issues

  1. 1 Whether the limitation of liability clause in the BIFA 1989 Conditions is reasonable under the Unfair Contract Terms Act 1977 when applied to a failure to arrange insurance as instructed.
  2. 2 Whether there was equality of bargaining position between the parties.
  3. 3 Whether the limitation clause was sufficiently brought to the attention of the plaintiff and consented to.

Ratio Decidendi

The limitation of liability clause was not reasonable under the Unfair Contract Terms Act 1977 as applied to the failure to arrange insurance, given the lack of real bargaining equality, insufficient clarity and consent to the limitation, and the one-sided effect depriving the plaintiffs of both goods and insurance for derisory compensation. The appellants failed to discharge the burden of proving reasonableness.

Court Disposition

Appeal dismissed

Orders

  • Appellants to pay the full value of the goods (£8,589.66) plus interest (£785.07) and costs to the plaintiffs.