Goodlife Foods Ltd v Hall Fire Protection Ltd
Court of Appeal
Citations:  EWCA Civ 1371;  BLR 491;  CTLC 265;  CLY 537.
The Appellant sought a quote from the Respondent for a fire safety system for one of its fryers. The Respondent gave the quotation on a document which contained their standard terms and conditions. This included three clauses:
- An exclusion of liability clause;
- A clause entitling the Appellant to a free replacement of any faulty components;
- An offer to allow the Appellant to pay more for the Respondent to provide insurance against losses falling within the exclusion clause.
The exclusion clause was in ordinary font. The opening paragraph of the document expressly flagged the clause’s potentially wide-reaching effect.
The Appellant replied a year later with a purchase order. Ten years later, a fire broke out at the fryer. The Respondent’s system failed to supress the fire, allowing it to spread. The Appellant sued for breach of contract. The Respondent sought to rely on the exclusion clause. The Appellant contended that the clause had not been incorporated into the contract because the Respondent had not given sufficient notice of it. Alternatively, they contended that the clause was void for unfairness under the Unfair Contract Terms Act 1977.
- Was the exclusion clause incorporated into the parties’ contract?
- Was the exclusion clause void for unfairness under UCTA?
The Court of Appeal held in favour of the respondent.
- Despite being an exclusion clause, it was not an unusual or particularly onerous clause. The Respondent needed only to give notice that the quotation contained contract terms (which they had done). They were not required to give specific notice of the exclusion clause.
- In any case, the Respondent had given sufficient notice of the clause.
- The clause was not void for unfairness.
The Respondent could therefore rely on the exclusion clause as barring their liability.
This Case is Authority For…
Factors relevant to whether a clause is unusual or onerous include:
- Whether the party has ongoing maintenance or control obligations with respect to the subject matter, or whether they are merely excluding the risk of unlimited future liability for something they have no control over;
- The stringency and breadth of the clause;
- The commonality of clauses of that type in the relevant industry;
- Whether the party was prepared to accept greater liability.
Factors relevant to whether sufficient notice of a clause has been given include:
- Whether the clause is ‘buried in small print’;
- How clear and express its language is;
- Whether the other party had time to acquire legal advice on the effect of the contract.
The court will assess the reasonableness of a clause under UCTA from the perspective of the parties at the time of contracting. The court will not assess the clause with the benefit of hindsight. Factors relevant to whether an exclusion clause is void for unfairness under UCTA include:
- The stringency and breadth of the clause, including whether it deals with liability for a condition (rather than an innominate term or warranty);
- Whether other terms of the contract offset the stringency of the clause (such as the clause concerning replacement of faulty parts in the present case);
- Whether the other party could have gone elsewhere for better terms;
- The extent to which the parties had equal bargaining power;
- Whether there was any negotiation between the parties on terms;
- Whether the party knew or ought to have known of the clause;
- The availability of insurance, and which party was best place to acquire such insurance.
Coulson LJ noted that a clause is not automatically unusual or onerous purely because it is a limitation or exclusion clause: ‘Everything turns on context’. Both Coulson LJ and Gross LJ stressed that the issue of whether a clause is incorporated and whether it is fair under UCTA are analytically separate (despite some overlap in the factors relevant to each).