Unreasonable exclusion under UCTA  

Phoenix Interior v Henley Homes (High Court) [2021]

English contract law very largely respects the principle of freedom of contract, allowing commercial businesses to decide whether and upon what terms to contract, acting in their own best interests. The primary exception to this is the Unfair Contract Terms Act dating from as long ago as 1977 which requires that certain limitation and exclusion clauses must satisfy a ‘reasonableness’ test in order to be enforceable. It is therefore of critical importance for contracting parties and their advisors to be aware of the latest judgments from the courts as to when a clause might be held to be unreasonable.


Phoenix are a firm of interior designers. They tendered to be appointed to provide interior design services as part of the refurbishment of a hotel in the Scottish highlands. Phoenix presented its design concept at a meeting following which it sent its proposal via email which referred to standard terms and conditions which were said to be ‘overleaf’, although in fact they were attached as a separate document. Subsequent revisions to the proposals made similar references but no terms were attached to the emails. 

The parties got into dispute over a variety of matters including the quality of the fixtures, fittings and soft furnishings supplied. As a result, the hotel owner refused to release payment of a sum marginally in excess of £232,000.

The hotel owner argued that this sum represented the balance of the contract price which was only due on practical completion of the works. They further argued that because the services provided and goods supplied were so defective, practical completion could not have occurred. They also claimed damages reflecting the cost of replacing the hard and soft furnishings.

Phoenix sought to rely upon their terms and conditions. These provided that, "[Phoenix] shall be under no liability under the above warranty (or any other warranty, condition or guarantee) if the total price of the goods has not been paid by the due date for payment". Since the total price had not been paid, they argued that pursuant to the quoted provision, they had no liability in damages.


The judge decided that Phoenix’s terms and conditions were properly incorporated on the basis that:  

hard copies of the terms and conditions had been provided at the initial presentation; although the initial proposal referred to terms and conditions as being ‘overleaf’, a set of those terms and conditions was attached to the email; there was a clear course of dealings between the parties over the preceding ten years which demonstrated that terms and conditions had been sent and accepted, and provided at presentation meetings.

However, the limitation clause failed to satisfy the reasonableness test because:

it was an unusual clause, tucked away in the standard terms and conditions and not something which had been highlighted to the client; the claimant had failed to demonstrate why an anti-set off clause would not have sufficed instead; the effect of the clause was potentially exorbitant given that even the slightest delay in payment meant that the claimant avoided all liability relating to the quality of goods supplied; the clause was difficult to apply, given the uncertainties around the timing of completion and therefore determining the due date for payment; completion being an event as opposed to a fixed date.

Points to Note:

back to archive