Thompson v Lohan - Case Summary

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.