In Lobster Group Ltd v Heidelberg Graphic Equipment Ltd  EWHC 1919 (TCC), on a claim for damages for defects in a printing press designed and manufactured by the first Defendant, Heidelberg, and hired from the second Defendant, Close Asset Finance (CAF), Mr Justice Ramsey ruled that the unreasonableness of a sub-clause excluding liability for direct loss and damage in an exclusion clause that was otherwise reasonable rendered the whole clause "unreasonable".
The purported effect of the exclusion clauses in the warranty agreement between Lobster and Heidelberg was to exclude all liability for damage so that Heidelberg's liability was limited to replacing or repairing the defective part in the printing press. In assessing reasonableness, the judge considered that the following factors were of importance. First, Lobster and Heidelberg were reasonably substantial commercial entities, experienced in the industry and there was evidence that Lobster had standard terms, although there was no evidence as to their scope or effect. Second, Lobster and Heidelberg had been involved previously in the provision of another printing press. Third, absent the warranty, Heidelberg would have had no contractual liability for defects in the press. Finally, Lobster would be best placed to know what losses it might suffer if its business was affected by problems with the press. There was also evidence that they had some insurance although the terms and scope were not in evidence.
In these circumstances, where Heidelberg undertook a limited obligation to replace or repair defective parts, the judge did not consider that there was anything unreasonable about Heidelberg excluding liability other than the obligations to remedy defects. Nor did he consider that the exclusion of liability in respect of matters arising from Lobster's incompetence or negligence was in any way unreasonable. The judge did, however, consider that the exclusion for damages for "immediate loss" was unreasonable, as was the exclusion of liability for any increased costs or expenses and direct damage. The judge considered, for instance, that if Heidelberg failed to replace or repair a defective part then, at the very least, it was unreasonable that Lobster should not be able to recover damages for breach of contract to cover the "immediate loss" or "increased costs or expenses" or "direct damage" suffered in paying others to remedy the defects.
The judge considered that the exclusion of immediate loss and of increased costs or expense and direct damage rendered the sub-clauses in which they appeared unreasonable "and in doing so the unreasonableness goes to the whole of the provision" (Stewart Gill v Horatio Myer  QB 600 applied).