EXCLUDING LIABILITY FOR DIRECT AND IMMEDIATE LOSSES

Lobster Group Ltd v Heidelberg Graphic Equipment Ltd [2009] EWHC 1919 (TCC), [2009] All ER (D) 37 (Aug)

In Lobster Group Ltd v Heidelberg Graphic Equipment Ltd [2009] EWHC 1919 (TCC), [2009] All ER (D) 37 (Aug) Mr Justice Ramsey held that an exclusion clause which sought to exclude liability for ‘immediate loss’ or ‘increased costs or expenses’ or for ‘direct damage’ was unreasonable. An important factor which persuaded him to reach this conclusion was his desire to avoid leaving the claimant without a meaningful means of redress as a result of the restructuring of the parties’ contractual relationships. While it was reasonable to exclude liability for consequential losses, the effect of the extension of the exclusion clause to immediate or direct losses was held to be to invalidate the clause as a whole. This conclusion stands as a reminder of the danger of drafting exclusion clauses too broadly: the invalidity may infect the clause as a whole and leave a party without protection even against losses in respect of which it would have been reasonable for it to seek to exclude liability.