Contract

Limit of liability clause - entire agreement clause acknowledging non-reliance on statements or representations - acknowledgment to be taken into account when construing limitation of liabilityWatford Electronics Ltd v Sanderson CFL Ltd: CA (Lords Justices Peter Gibson, Chadwick and Mr Justice Buckley); 23 February 2001The parties had entered a contract for the supply of computer software products.

The claimant commenced proceedings when the system supplied allegedly failed to perform.

On a preliminary issue as to the construction of a limit of liability clause the judge held that it was unreasonable in its entirety.

The defendant appealed.Mark Raeside (instructed by DLA, Birmingham) for the defendant; Peter Irvin (instructed by Needleman Treon) for the claimant.Held, allowing the appeal, that the presence of an entire agreement clause acknowledging non-reliance on statements or representations made in agreeing to enter the contract coloured the effect of what the parties intended by the limit of liability clause; that a court should not refuse to give effect to such an acknowledgment in a commercial contract between experienced parties of equal bargaining power where they had the benefit of professional advice; that it was important that a court had the assistance of that guidance when construing a limit of liability clause; and that, accordingly, since the judge had not assessed the significance and effect of the acknowledgment, he had reached the wrong conclusion as to the scope of the limit of liability clause and its reasonableness.