Amiri Flight Authority v BAE Systems Plc

An exclusion clause must be construed in its contractual setting and, if genuinely ambiguous, against the party relying upon it. Clear language may nevertheless exclude liability in contract and tort for defects caused by negligent performance of obligations located elsewhere in the contract.

Under section 26(4)(c) of the Unfair Contract Terms Act 1977, an agreement made in one state provides for goods to be “delivered to” another state only where the goods are to move into that other state. Delivery within a state, without international movement, is insufficient. Such a contract therefore remains subject to the Act's controls.

The appellant bought an aircraft from the respondent under a written contract made in Abu Dhabi. Serious corrosion was later discovered in the aircraft's fuel tanks. The appellant alleged that the respondent had negligently prepared and revised the aircraft's maintenance programme and supplied inadequate technical advice.

Tomlinson J granted summary judgment for the respondent. He held that clause A.10 excluded the contractual and tortious claims and that the agreement was an international supply contract under section 26 of the Unfair Contract Terms Act 1977. On that basis, the exclusion was not subject to the Act's fairness or reasonableness controls.

The appeal concerned the scope of clause A.10 and whether delivery of the aircraft in the United Kingdom satisfied the words “delivered to” in section 26(4)(c).

1. Appeal allowed unanimously. Lord Justice Mance delivered the judgment, with which Lord Justice Rix and Lord Justice Potter agreed. The claim was reinstated and remitted to Tomlinson J because the contract was not an international supply contract excluded from the controls of the Unfair Contract Terms Act 1977.

2. Clause A.10 clearly excluded liability for defects caused by breaches of the respondent's obligations concerning the maintenance programme and technical advice. Although situated in the aircraft warranty, its language extended to defects resulting from training, advice or supervision supplied under other parts of the contract. The corrosion affecting the aircraft's airworthiness constituted a defect for this purpose. The clause did not, however, operate where no defect had been caused.

3. The clause also barred the tort claim. It expressly covered tortious liability, including negligence, and the pleaded tortious duty arose solely from activities undertaken in performing the contractual obligations. If genuine doubt had remained, the exclusion would have been construed against the respondent. Read with appropriate care, however, its language was clear and unambiguous.

4. A person who signs a contractual document ordinarily incorporates and accepts its terms in the absence of misrepresentation. The special-notice reasoning applied to an onerous term in an unsigned contractual setting did not provide an additional means of escaping a clear term in this signed written agreement.

5. Section 26(4)(c) uses “delivered to”, rather than “delivered in”. Its ordinary meaning requires movement of the goods into a state other than the state in which the acts constituting offer and acceptance occurred. The aircraft was manufactured and delivered within the United Kingdom, while offer and acceptance both occurred in Abu Dhabi. The condition was therefore unsatisfied.

6. The legislative history did not justify replacing the statutory word “to” with “in”. Legislative antecedents may form part of the interpretative background, but they should not displace clear statutory language without sufficient contextual or purposive reason. The respondent's summary judgment application was dismissed and the unresolved issues under the 1977 Act were remitted.

1. Court of Appeal (Civil Division): The appeal was allowed unanimously. The summary judgment order was set aside, the claim was reinstated and the proceedings were remitted to Tomlinson J to determine the outstanding issues under the Unfair Contract Terms Act 1977.

2. High Court, Queen's Bench Division (Commercial Court): Tomlinson J dismissed the claim under CPR Part 24. He held that clause A.10 excluded the claim and that the agreement was an international supply contract outside the Act's controls. No citation for that decision is stated.