Exemption clause. Watch

Dee_Pars
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Hi all,

NRV Ltd went to ACM Ltd with engine problems. An employee for ACM, Steve, installed a radiator without attaching a pipe correctly. As a result, the engine overheated and failed. The cost to replace is £1,800. As a result, NVR Ltd lost 11 days' jobs, amounting to £11,000 loss of profit.
However, there is an exclusion clause stating:

1. Any loss of profit in failing to exercise care and skill shall be limited to £60 per day.

2. NVR will not be liable for any damage caused from lack of quality of goods or unfitness of goods.

3. NVR shall have no liability for any loss caused by delay or for any loss or personal injury arising from negligence.

I understand that this is a breach of s.13 SGSA and is thus negligence; however, what's confusing me is the limitation clause attempting to restrict liability. Clause 3 states that no loss will arise from any loss of negligence, whereas clause 1 states that any failure to exercise reasonable care (i.e. SGSA s.13) will be limited to £60.00 per day. How do I approach this?

Incorporation is not an issue. However, I don't know which clause applies to the above scenario. Do both apply? If s.13 falls under negligence, does clause 1 have any relevance at all (as negligence is completly restricting liability).

Thanks in advance for any and all help.
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yastyb
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(Original post by Dee_Pars)
Hi all,

NRV Ltd went to ACM Ltd with engine problems. An employee for ACM, Steve, installed a radiator without attaching a pipe correctly. As a result, the engine overheated and failed. The cost to replace is £1,800. As a result, NVR Ltd lost 11 days' jobs, amounting to £11,000 loss of profit.
However, there is an exclusion clause stating:

1. Any loss of profit in failing to exercise care and skill shall be limited to £60 per day.

2. NVR will not be liable for any damage caused from lack of quality of goods or unfitness of goods.

3. NVR shall have no liability for any loss caused by delay or for any loss or personal injury arising from negligence.

I understand that this is a breach of s.13 SGSA and is thus negligence; however, what's confusing me is the limitation clause attempting to restrict liability. Clause 3 states that no loss will arise from any loss of negligence, whereas clause 1 states that any failure to exercise reasonable care (i.e. SGSA s.13) will be limited to £60.00 per day. How do I approach this?

Incorporation is not an issue. However, I don't know which clause applies to the above scenario. Do both apply? If s.13 falls under negligence, does clause 1 have any relevance at all (as negligence is completly restricting liability).

Thanks in advance for any and all help.
As it appears clause 3 and clause 1 are frontally in contradiction with one another. I can't remember the case's name (it was a shipping case) where two clauses were saying different things on the same topic. Look at Mckendrick you'll find it in an extract.

Clause 3 will be held invalid in its entirety because it purports to exclude liability for personal injury which is impermissible under UCTA. Since part of a clause cannot be severed the whole clause drops.

Clause 2 can't stand as well because you can't exclude liability for the fitness of goods under the SoGA.

The first one is a limitation clause and will be construed less strictly then an exclusion clauses. A good case to read is something called 'international computers' something. It speaks about limiting loss to a certain amount where the amount would be disproportional to the actual loss. You might also want to look at how the House of Lords construed the issue of two frontally contradicting clauses.


Sorry this is off the top of my head and I must have missed some issues so take the time to go to your tutor to ask for further clarification.
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Dee_Pars
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(Original post by yastyb)

Clause 3 will be held invalid in its entirety because it purports to exclude liability for personal injury which is impermissible under UCTA. Since part of a clause cannot be severed the whole clause drops. .
Thank you for this helpful answer.

However, clause 3 concerns damage to goods - the clause exempts for any loss OR personal injury caused by negligence. If I am correct, as the clause does not involve negligence or death it is irreleveant?

As regards clause 2, as the party is a business and it is a service, am I correct in thinking that SGSA s.4 applies?

When looking at construction of a limitation clause, how would you apply it?

Thanks!
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