"No Consequential Loss" Clauses In Contracts Can Have Wide Application

The contractor in Environmental Systems Pty Ltd v. Peerless Holdings Pty Ltd [2008] VSCA 26 specialised in the supply of vapour emission control systems and engineering services to the petrochemical industry. In its tender which formed part of the contract there was a provision that the contractor "does not accept liquidated damages or consequential loss". There was no definition of what consequential loss was being referred to.

The contract required the supply of a Regenerative Thermal Oxidizer (RTO) by the contractor. Ultimately the RTO did not perform as required and the purchaser made various claims for its loss and damages as a result including its costs incurred in purchasing, installing and commissioning the RTO, the costs of labour incurred in attempting to the make the RTO operate properly and for the cost of the excessive gas consumption of the RTO when it was operating. Although the purchaser's claim succeeded in part, the Supreme Court held that that the