BEWARE: Exclusion of Liability Clause found to be unreasonable

The High Court in Pheonix Interior Design Ltd v Henley Homes plc and another [2021] EWHC 1573 (QB), has held that an exclusion of liability clause in a supplier’s standard terms and conditions (T&Cs) was ineffective as it failed the “reasonableness” requirement under the Unfair Contract Terms Act 1977 (UCTA).  The relevant clause stated that:

“The Seller shall be under no liability under the above warranty (or any other warranty, condition or guarantee) if the total price of the Goods has not been paid by the due date for payment”.

Based on the facts of the case, Freedman J found the exclusion clause to be ineffective because for the following reasons:

  • it was an unusual clause;
  • it was “tucked away in the undergrowth of” the T&Cs and was not highlighted to the customer;
  • it was also exorbitant (as the consequences of a slight delay or deduction would bar all rights of redress against the supplier); and
  • there was a lack of clarity over what the “due date” meant.Although the case does not create new law, it serves as a stark reminder that great care needs to be taken when drafting and dealing with limitation of liability clauses in standard terms and conditions.

Remember: when preparing standard terms and conditions and drafting any limitation of liability clause, you need to:

  • ensure that any hard or unusual clauses are visible and well signposted; DON’T hid them away!!
  • Make it easy for the other party to find the T&Cs

If you need help drafting your terms and conditions of business or would like someone to look over and review the terms that you use, then please contact our Corporate and Commercial team on 01524 548494 or 01228 552600.

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