St Albans DC v International Computers [1995]

Contract for supply of software by IC to assist in
collection of poll tax.
Limitation clause – £100 000
Software faulty and council lost over £1m.
Did UCTA s3 apply?
Divisional court held:
1.  Council had
not acted as consumer in contracting with IC.
2.  But limitation
clause did form part of IC’s written standard terms.
Whether parties dealt on defendant’s written standard
terms was question to be determined on facts of case. Not all terms had to be
fixed by supplier for him to be dealing on his standard terms –
Some clauses, eg price, might be negotiated
Although had been negotiations in present case, had
left defendant’s general conditions effectively untouched
3.  Therefore
UCTA s3 applied to limitation clause and reasonableness test applied.
4.  Limitation
caused failed to satisfy reasonableness test.
Defendant had v substantial resources, and substantial
insurance for product liability.
Defendant one of few Companies who could meet plaintiff’s
requirements, all of whom dealt on standard conditions, and hence had v strong
bargaining position.
By contrast, plaintiff under tight time scale, and had
no opportunity to enter into similar contract with someone else without such an
exclusion clause.
Court of Appeal upheld these parts of Divisional Court’s
decision, and did not dispute reasoning.