Interesting judgment in 2 Entertain Video Ltd v Sony DADC Europe Ltd [2020] which is likely to have an impact on how providers and customers of warehousing, distribution and logistics services approach risk allocation and liability in their contracts.  The case related to a break-in and arson attack at the defendant's warehousing facilities during the 2011 London riots, as a result of which the claimant lost large volumes of stock. The judgment is notable for a number of reasons.  First, liability arising from the riots and resulting fire was not excused by the force majeure provisions (despite riot and fire both being referred to in the force majeure definition).  This was on the basis that the warehouse provider could have taken reasonable precautions to prevent the break-in and fire occurring.  Perhaps of more importance to warehousing, distribution and logistics providers, a contract term which sought to limit the warehouse provider's liability for "any loss of or damage to Client's Materials or Client's Goods" to "their manufacturing replacement cost" was held to apply only to the claimant's claim for loss of goods, and did not prevent the claimant from recovering knock-on losses such as loss of profit and business interruption losses.  Finally, the judgment serves as yet another reminder that loss of profits, revenue and business interruption, in the context of many business to business contracts, are likely to be considered direct loss and will therefore not be caught by an exclusion of indirect and consequential loss. 

The decision means that logistics, distribution and warehouse providers should revisit their standard form contracts to ensure that, where they intend to exclude liability for financial losses (such as loss of revenue and profit) and to limit their liability to the cost of replacement of the goods only (when the goods are lost or damaged), the terms governing liability are carefully crafted to achieve that outcome.  

Full judgment can be found here: