Thompson v T Lohan (Plant Hire) Ltd [1987] 1 WLR 649
The validity of an exclusion clause
Facts
The defendant was a company which hired plant and machinery with operators if necessary. The claimant hired some machinery with two of the defendant’s operators. One of the operators was killed due to the negligence of the other. The deceased operator’s estate sought a judgment against the claimant and the defendant and was awarded an order against the defendant. The defendant then claimed an indemnity against the claimant under the terms of the agreement. The agreement contained a clause which provided that operators were to be considered the servants of the hirer and that the hirer alone should be liable for claims in relation to losses arising out of the use of the machinery. The defendant was awarded its indemnity and the claimant appealed on the basis that the clause was not sufficiently clearly worded to absolve liability or alternatively it was an exclusion clause and therefore was invalid under section 2(1) of the Unfair Contract Terms Act 1977.
Issues
The issue in this circumstance was whether the clause within the contract was effective in allowing the claimant to be liable for the defendant’s operator’s negligence.
Decision/Outcome
It was held that the clause was effective in respect of passing liability to the claimant at common law. Furthermore, it was not an exclusion clause within the meaning of the 1977 Act because the purpose of the Act was the protection of victims of negligence. This clause did not purport to exclude liability owed to the killed operator. The effect of the clause was simply an agreement between the parties as to which would carry the burden of liability.
Updated 20 March 2026
This case summary accurately reflects the decision in Thompson v T Lohan (Plant Hire) Ltd [1987] 1 WLR 649. The core legal principles remain good law. The Court of Appeal’s distinction between a clause that excludes or restricts liability to a victim of negligence (caught by section 2(1) of the Unfair Contract Terms Act 1977) and a clause that merely reallocates liability as between contracting parties inter se (not caught by the Act) continues to be applied by the courts and is frequently cited in textbook discussions of UCTA 1977.
Readers should note that the Unfair Contract Terms Act 1977 itself remains in force for business-to-business contracts, though the consumer law landscape has changed significantly. The Consumer Rights Act 2015 now governs unfair terms in consumer contracts and supersedes the relevant provisions of UCTA 1977 and the Unfair Terms in Consumer Contracts Regulations 1999 in that context. This does not affect the analysis in Thompson v Lohan, which concerned a commercial hire agreement, but students should be aware of the wider statutory framework.
