St. Albans City & District Council v International Computers
Breach of an express term in the contract (software contained an error) but International Computers sought to limit liability to 100,000 through limitation clause.
Council brought an action under s3 UCTA and, as Council was not a consumer and they had dealt on IC's standard terms, it would be valid if it satisfied the reasonableness test.
Therefore s11(4) and Sch 2 guidelines were considered, along with Smith v Eric Bush.
1) Financial power
: IC were a huge company with substantial resources to meet any liability.
: IC had liability insurance of 50milion so could not justify 100,000 limitation clause in terms of potential or actual loss.
- 3) Bargaining power:
- - IC was in a very strong position relative to Council since it was one of a limited number of company's the could fulfill the Council's requirements.
- - There were few alternatives since other companies used similar limitation clauses.
- - Council was not a business so not entirely equal bargaining positions.
4) Practical consequences
: while IC had insurance to cover loss, Council's loss would be passed on to local population either through reduced services or higher taxes.