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Watford Electronics Ltd v Sanderson CFL Ltd

[2001] All ER (Comm) 696

Case summary last updated at 02/01/2020 10:54 by the Oxbridge Notes in-house law team.

Judgement for the case Watford Electronics Ltd v Sanderson CFL Ltd

D sold faulty equipment to P and used various terms to limit liability. One term excluded liability for indirect or consequential loss whether arising from negligence or otherwise and the second limited the defendant's total liability under the contract. CA held that the term excluding liability for indirect loss was fair and reasonable since still left D exposed to significant liability e.g. didn’t exempt him from loss related to breach of warranty. This was a case where the judge’s decision was so obviously wrong that Lord Bridge’s dictum was no barrier to overturning the initial finding (that it was unreasonable). 
Chadwick LJ: The indirect loss exemption is fair and reasonable since The parties were of equal bargaining strength; the inclusion of the term was, plainly, likely to affect Sanderson's decision as to the price at which was prepared to sell its product; Watford must be taken to have appreciated that; Watford knew of the term, and must be taken to have understood what effect it was intended to have; the product was, to some extent, modified to meet the special needs of the customer.

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