Court Strikes Down Exclusion Clause

Exclusion clauses in standard terms of business are vulnerable to attack under the Unfair Contract Terms Act ("UCTA"). UCTA renders unenforceable exclusion clauses in standard terms of business unless the clause satisfies the requirement of "reasonableness".

In a recent case the Mercantile Court struck down an exclusion clause in a serviced-office agreement. An IT training company agreed to take office space for a period of time. The air conditioning in the offices was not up to scratch, with the result that the offices were often too hot to allow training to take place.

The IT company sued the serviced-office company for damages. It claimed to have suffered a loss of business as a result of the furnace-like conditions in the offices. In its defence, the serviced-office company relied on it standard terms of business, which attempted to exclude the company from "any liability for loss of business, loss of profits, loss of anticipated savings, loss of damage to data, third party