Excluding Liability: What Are The Limits?

It is frequently the case that companies try and exclude as much liability as possible in their standard terms and conditions. The recent case of Regus (UK) Ltd v Epcot Solutions Ltd [2007] EWHC 938, which came before HHJ Mackie QC, demonstrates that there are clear limits on what can and cannot be so excluded.

Facts

Regus (UK) Limited ("Regus") supply serviced office accommodation. Epcot Solutions Ltd ("Epcot") provide professional IT training. Epcot entered into an agreement with Regus on Regus' usual terms and conditions for the use of serviced office accommodation for Epcot's training courses. Epcot initially rented office accommodation in Heathrow. After Regus closed this location, Epcot were offered, and accepted, alternative accommodation at Stockley Park. Epcot moved to Stockley Park and entered into a new agreement with Regus on the same terms and conditions.

The air conditioning system at Stockley Park did not work satisfactorily. Epcot made several complaints to Regus regarding the air conditioning and complained that their training courses were being adversely effected by the extreme hot and cold temperatures generated by the air conditioning. Despite these complaints, Epcot entered into a further agreement with Regus on the same terms and conditions. Epcot continued to make complaints about the air conditioning system. Regus did not take any effective steps to repair the air conditioning and negotiations between the parties failed to resolve the problem.

Regus then suspended services to Epcot and claimed unpaid fees up to the end of the agreed term. Epcot raised a number of counterclaims including damages for loss of profits, loss of the opportunity to generate profits, and for distress, inconvenience and loss of amenity suffered by reason of Regus' failure to provide adequate air-conditioning.

Regus' usual terms and conditions included an exclusion clause (clause 23) limiting Regus' liability in any circumstances for "loss of business, loss of profits, loss of anticipated savings, loss of or damage to data, third party claims or any consequential loss." Clause 23 also limited liability in respect of other losses, damages, expenses or claims.

Issues

Was Regus' failure to provide adequate air-conditioning a breach of contract?

Did Clause 23 restrict and/or exclude Epcot's ability to claim for loss of business, loss of profits, loss of anticipated savings, loss of or damage to data, third party claims or any consequential...