A recent ruling of the Technology and Construction Court (TCC) has provided a useful reminder of the reasonableness requirement for limitation clauses, and in particular limitation periods, under the Unfair Contract Terms Act 1977.
A contractor was employed to perform building works on a property. The contract included a limitation clause which stated:
“No action or proceedings under or in respect of the [contract] shall be brought against the Contractor after:
(i) the expiry of 1 year from the date of Practical Completion of the Services; or
(ii) where such date does not occur, the expiry of 1 year from the date the Contractor last performed Services in relation to the Project.”
Dean Construction (DC) never formally certified practical completion, and Inframatrix Investments (II) issued proceedings, claiming that the works were defective.
The Technology and Construction Court (TCC) ruled that II’s claim had been issued more than 1 year from the date on which DC last performed the services under the contract. The TCC therefore struck out the claim.
Whilst this ruling is only in respect of a strike out application by DC, it should be noted that the TCC clearly ruled that the bespoke limitation period applied and could be relied on by DC. This is a reminder that, if a business wants a specific limitation period to apply to a contract, it must expressly state that limitation period in the contract, but once it is stated, provided it is reasonable, the limitation period can be relied on. Crucially, though, it must be reasonable– otherwise, the attempted limitation may not be enforceable under the Unfair Contract Terms Act. What is reasonable depends on the facts of the case.