This Act has for some years regulated clauses excluding certain contractual and tortious liability – some terms are simply ineffective, others are subject to the test of reasonableness. This is primarily a question of fact for the judge at first instance, which means that it is crucial in defending an exclusion clause to succeed at trial on the facts, and this may mean putting the right facts into evidence.

In addition, if a party relies on standard terms with an exclusion / limitation clause but makes no express allegation of reasonableness, they are held to be impliedly making the case that terms are reasonable: “The assertion as to the term satisfying the requirement of reasonableness may properly be regarded as a necessary particular of the Defence which is based on the exemption clause.”[1]

This might mean ensuring that the issue is addressed in evidence even if no point is taken on the pleadings. For example – why is it necessary? What does it protect the business from? Why can’t the business take this risk? Is it standard in the industry, and if so why?

Even widely used terms can be unreasonable. An example is Schyde Investments Ltd v Cleaver.[2] The clause there which was held to be unreasonable was a term from the Standard Conditions of Sale of Land (4th edition) 7.1.3 and held that it did not exclude misrepresentation on the facts of the case. The Court of Appeal held that although the term had a long history, was a well-established feature of property transactions and had been endorsed by the Law Society, and although both sides were represented by solicitors and the parties had negotiated variations of other standard provisions, they would not interfere with the Judge’s decision on the facts of the case.

So be sure to be able to justify your exclusion clause on the facts of your case!