Certain terms in your contract

When writing your contract, you should create clauses which are certain. It is one of the five essential elements for a binding contract (see What You Need). The courts will not enforce  a clause or term if they cannot be sure what it means.

Limiting Your Liability

In Trebor v ADT, the proposed limit of ADT’s liability was expressed as:

“…no more than 20 times the amount of the yearly service charge (excluding VAT) which you are paying at the time of the loss.”

Sadly, this was not in a contract providing for a yearly service charge, but a contract for the design, supply and install of equipment. The court said: “...the provision, as it stands, was meaningless, because the limitation was calculable only by reference to the value of a non-existent contract. That was too uncertain to be enforceable.

Suppliers, particularly of equipment used in hazardous environments, should aim to limit their liability. But not by being vague!

Case: Trebor Bassett Holdings Ltd & Anor v ADT Fire and Security Plc [2011] EWHC 1936 (TCC)

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