The High Court in Air Transworld Ltd v. Bombardier Inc.¹ ruled that an exclusion clause that did not expressly refer to the word "conditions" was nevertheless successful to exclude the conditions implied into a sale of goods under the Sale of Goods Act 1979 (England). In a dispute over the condition of an executive aircraft at the time of delivery from the manufacturer, the High Court ruled that the exclusion clause was clear that all the seller's obligations and liabilities were to be found exclusively in the contract, and that general wording excluding obligations implied by law was sufficient to exclude the conditions implied by the Sales of Goods Act. Mr Justice Cooke rejected arguments that the relevant contract provision as an exclusion clause should be construed contra proferentem, with the result that any ambiguity should be determined in favour of the plaintiff/claimant.
The plaintiffs claim alleged that the aircraft did not correspond with description, was not of satisfactory quality and was unfit for purpose within the meaning of the Sale of Goods Act (ss. 13 &14)("SGA"). The defendant relied on the terms of the contact excluding liability under statute and replacing it with a set of contractual warranties.
The judgement takes us through a line of English authorities, the effect of which is that liability cannot be excluded for a breach of a condition implied by the SGA by exclusions which refer merely to "warranty" or "guarantee", even if those words are cross-referenced to statues or rules of law, which would otherwise give rise to an implication of such terms. The authorities required any term excluding a condition implied by the SGA to be in "apt and precise words" if it is to be effective.
Mr Justice Cooke commented that based on the wording in the contracts, there was plainly intended to be no room for the operation of any primary or secondary rights or obligations outside the terms of the contract itself. He further commented that: "No person reading this Article [4] could be in any doubt that every promise implied by law is excluded, in favour of the contractual promises set out in the APA".
Unfair Contract Terms Act 1977 (England) does not apply to an "international supply contract" and accordingly it was of no assistance to the claimant in this case.
Comment
We note that the transcript of this case indicates that an appeal is outstanding of this judgement. It is likely that the appeal will involve review of the legal analysis of this decision which runs contrary to the line of English authorities which states that liability cannot be excluded for a breach of a condition implied by the SGA, by exclusions which are lack precision required to unequivocally exclude such liability.
Footnote
1 [2012] EWHC 243
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
