Overseas Medical Supplies Limited v Orient Transport Services Limited: CA 20 May 1999

The appellant challenged a finding that it was responsible for the loss of medical equipment being transported from Tehran to the UK, and of failing to insure it as required, the contractual term exempting it from responsibility being an unreasonable one under the Act, since the obligations imposed on the respectve parties were imbalanced.
Held: The insurance requested was not practically available other than through the defendants. The claimants requested the insurance, and the defendants did not sufficiently clearly set out that the limitation of liability applied also if they did not insure. Given the values the limitation to andpound;600 was derisory. The limitation clause was unreasonable.
Potter LJ said: ‘First, so far as this Court is concerned, while the hearing of this appeal is in the form of a re-hearing and the Court is entitled to reach its own view of the evidence, its approach is constrained by a natural reluctance to disturb a first instance decision as to what is reasonable in all the circumstances of a particular case, bearing in mind that views on reasonableness may properly differ and that, in any matter where the decision depends not merely on argument but also on the effect of oral evidence, the first instance Judge has the advantage of hearing such evidence at first hand.’


Lord Justice Potter Lord Justice Mantell


[1999] EWCA Civ 1449, [1999] 2 Lloyd’s Rep 273




Unfair Contract Terms Act 1977


England and Wales


ApprovedGeorge Mitchell (Chesterhall) Ltd v Finney Lock Seeds Ltd HL 1983
A seedsman sought to rely upon an exclusion clause preventing any claim by a purchaser by way of set off against its sales invoices. The House was asked whether a contractual term was ‘fair and reasonable’ within the meaning of section 55 of the . .
CitedSinger Co (UK) Ltd v Tees and Hartlepool Port Authority 1988
The court upheld under the 1977 Act a clause which limited a port authority’s liability to andpound;800 per ton of consignment. Other factors were relevant but ‘The way in which the port authority’s general conditions came into being seems to me to . .
CitedStewart Gill Ltd v Horatio Myer and Co Ltd CA 1992
The ‘guidelines’ in Schedule 2 are usually regarded as of general application to the question of reasonableness under the 1977 Act. The effect of s13 which deals with exemption clauses, is to apply s3 inter alia to ‘no set off’ clauses. The . .
CitedSchenkers Limited v Overland Shoes Limited and Schenkers International Deutschland Gmbh v Overland Shoes Limited CA 12-Feb-1998
A clause in a shipping freight contract using the standard British International Freight Association terms disallowing a set-off was not unreasonable. The clause read ‘The customer shall pay to the company in cash or as otherwise agreed all sums . .
CitedSt Albans City and District Council v International Computers Ltd QBD 11-Nov-1994
A liability limitation in a computer contract was an unfair contract term since it was a standard term, and it restricted liability when there had been no attempt to justify the amount chosen for the limit by reference, for example, to a . .
CitedAEG (UK) Limited v Logic Resource Limited CA 20-Oct-1995
The question of the reasonableness of a clause must be assessed having regard to the relevant clause viewed as a whole: it is not right to take any particular part of the clause in isolation, although it must also be viewed against a breach of . .
CitedSonicare International Limited v East Anglia Freight Terminal Limited 1997
When looking at the reasonableness of a clause limiting rather than excluding of liability, the size of the limit compared with other limits in widely used standard terms may be relevant. . .
CitedPhillips Products Ltd v Hyland CA 1987
To decide whether a clause is an exclusion clause it is necessary to look at the effect of the clause and not its form. ‘There is no mystique about `exclusion’ or `restriction’ clauses. To decide whether a person `excludes’ liability by reference to . .
CitedThe Flamar Pride 1990
When looking at the reasonableness of a clause limiting liability, the availability of insurance to the supplier is relevant but need not be decisive. . .

Cited by:

CitedCleaver and Others v Schyde Investments Ltd CA 29-Jul-2011
The parties had contracted for the sale of land. The purchaser secured the rescinding of the contract for innocent misrepresentation. A notice of a relevant planning application had not been passed on by the seller’s solicitors. The seller appealed . .
CitedAvrora Fine Arts Investment Ltd v Christie, Manson and Woods Ltd ChD 27-Jul-2012
The claimants had bought a painting (Odalisque) through the defendant auctioneers. They now claimed that it had been misattributed to Kustodiev, and claimed in negligence and misrepresentation.
Held: Based on the connoisseurship evidence, the . .
Lists of cited by and citing cases may be incomplete.

Transport, Contract, Consumer, Litigation Practice

Updated: 30 May 2022; Ref: scu.146364