Be careful tinkering with your supplier’s terms

Be careful when tinkering with your supplier's standard terms, otherwise you might get less protection.

We see businesses regularly get stuffed on this point, so it's worth taking note.

In basic terms, an exclusion or limitation of liability clause allows a business to avoid responsibility for certain losses/damage, even if they do something wrong. In a B2B context, a business can include these clauses in their standard terms of business, as long as they don't cover personal injury or death.

However, under the Unfair Contract Terms Act (UCTA) these clauses must still be 'reasonable'. This can give you some decent protection from over the top restrictions in supplier contracts. The problem is that when a contract is individually negotiated, this protection falls away so the clause can be as unreasonable as your supplier likes.

There was a recent case (Pinewood Technologies Asia Pacific v Pinewood Technologies) where the court found that regarding the defendant's standard terms, there "were negotiations between the parties ... which led to substantive changes to the terms...". Even though none of the liability exclusion/limitation clauses were tweaked, the court found that UCTA didn't apply. So the claimant couldn't challenge the clause(s) as unreasonable and was left to argue other less helpful points.

The takeaway point is that unless you know what you are doing, be very careful about opening up negotiations about your supplier's standard terms. And if you want to do that, make sure you are comfortable with any liability exclusion/limitation clauses, because you may not get chance to challenge how reasonable they are later.