Cases - Watford Electronics Ltd v Sanderson CFL Ltd
Record details
- Name
- Watford Electronics Ltd v Sanderson CFL Ltd
- Date
- [2001]; [2001]
- Citation
- EWCA Civ 317; BLR 143
- Legislation
- Keywords
- Tendering and procurement - Unfair Contract Terms 1977
- Summary
-
The contract for supply of software between the purchaser, Watford, and the supplier, Sanderson, contained a provision which purported to exclude liability for direct or consequential loss 'whether arising from negligence or otherwise'. The first instance judge found this unreasonable within the meaning of section 11 of the Unfair Contract Terms Act 1977, but the Court of Appeal, allowing the supplier's appeal, upheld the exclusion clause. Unlike those cases which are inevitably limited to their facts or the particular wording of the contract in this one, the Court of Appeal provided a statement of the proper approach to be taken by the courts regarded as setting the tone for the modern law. In the words of Lord Justice Chadwick:
'Where experienced businessmen representing substantial companies of equal bargaining power negotiate an agreement, they may be taken to have had regard to the matters known to them. They should, in my view, be taken to be the best judge of the commercial fairness of the agreement which they have made; including the fairness of each of the terms in that agreement. They should be taken to be the best judge on the question of whether the terms of the agreement are reasonable. The court should not assume that either is likely to commit his company to an agreement which he thinks is unfair, or which he thinks includes unreasonable terms. Unless satisfied that one party has, in effect, taken unfair advantage of the other - or that a term is so unreasonable that it cannot properly have been understood or considered - the court should not interfere.'
The editors of the Building Law Reports in which this case is reported observed that:
'Lawyers may have been too willing in the past to raise the 1977 Act as a defence or response to exclusion or limitation clauses. This decision will restrict such pleas.'