The landlord’s argument was that it had an exclusion clause in its agreement with the tenant which excluded losses arising to the tenant for ‘loss of business, loss of profits…and consequential loss’. The agreement also advised the tenant to insure itself against such eventualities and contained a limitation clause, which capped any claim at an absolute level of £50,000. The tenant argued that this clause was unfair under the Unfair Contract Terms Act 1977, because it was not reasonable. The tenant won in the first instance, because the judge concluded that the clause left the tenant with no remedy for its losses and was therefore unreasonable. The landlord appealed.
The Court of Appeal considered the issue and found that the landlord had been negligent in not repairing the air conditioning. However, it did not agree that the exclusion clause prevented the tenant from obtaining a remedy for its loss. The remedy was a claim for the difference between the value of services the landlord had contracted to provide and those actually provided. The exclusion clause was therefore reasonable. This decision will be taken as evidence that demonstrating that such a clause is reasonable may not be as difficult as had previously been thought.