Loss Prevention Loss Prevention Alerts

LPA 77 – Limits of Liability – Are They ‘Reasonable’ Under the Unfair Contract Terms Act?

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Published November 2023.

The commercial importance of limiting liability under an appointment and the ways in which effective and enforceable limits of liability can be achieved is a topic which the AGS Loss Prevention Working Group returns to regularly.

The recent case of Benkert UK Ltd v Paint Dispensing Ltd [2022] CSIH 55, heard in the highest Appeal Court in Scotland, provides some useful guidance on the considerations taken into account by the Court when determining whether or not a limit of liability is reasonable under the Unfair Contract Terms Act 1977 (UCTA).

In this case, the Scottish Appeal Court dismissed a challenge by Benkert that the limit of liability clause was unreasonable (and therefore unenforceable) under UCTA.