Exclusion clauses – the consequences of getting it wrong!

Exclusion clauses – the consequences of getting it wrong | BDM Blog | BDM Law

A reminder to all that when the time comes the Courts will read exclusion clauses carefully and seek to give effect to the words used in the context in which they are used.

We see many examples of exclusion clauses that are vague and ambiguous. That opens the way to arguments that any ambiguity should be construed against the party seeking to rely on the clause.

In a recent Court of Appeal decision (1)  it was argued that a claim for wasted expenditure incurred by one party was in fact another way of bringing a claim for loss of profit which was expressly excluded. That was the decision of the first instance Court but it was overturned on appeal. It was held that the wording of the exclusion clause was not wide enough to cover claims for wasted expenditure and that a claim for expenditure incurred was not a claim for loss of profit even though the expenditure may have resulted in the company generating a lower profit than would otherwise have been the case.

This case is a timely reminder to clients to take care when drafting exclusion clauses and to seek to couch them in the widest possible way. In this case, the consequence was a claim for £80M. Ouch!

  1. Soteria Insurance Ltd (formerly CIS General Insurance Limited) v IBM United Kingdom Limited [2022] EWCA Civ. 440.
Nick Burgess - author profile
Nick Burgess
Partner
Stephen Mann - author profile
Stephen Mann
Senior Associate
BDM is a specialist shipping law firm offering high quality legal advice and representation at a reasonable price. Please follow us on social media by clicking below.

Other Recent Blogs

  • Who’s Who Legal 2022 BDM partners selected for recognition | BDM Blog | BDM Law
    November 21, 2023

    Who’s Who Legal 2023: BDM partners selected for recognition

    We are pleased that, once again, our founding partners all appear as leading shipping lawyers in the Who’s Who Legal: Transport 2023 guide. This year Nick Burgess also appears as a “thought leader” which has given him pause for thought! The guide is based on independen[...]

    Read more >
  • Marine Claims Dublin 2023 | BDM Blog | BDM Law
    October 9, 2023

    Marine Claims Dublin 2023

    It was a pleasure to moderate the panel discussion on claims trends over the last year. Many thanks go to my fellow panellists Francesco Zolezzi, Ruby Hassan and Victor Fenwick. Thanks also to the organisers for arranging such a splendid residential course with lots of chanc[...]

    Read more >
  • BDM ranked again it the Legal 500 | BDM Blog | BDM Law
    October 5, 2023

    BDM ranked again in the Legal 500

    Once again we must convey our thanks to all those who helped us to retain our ranking as a leading shipping firm in this year’s Legal 500 rankings. Particular thanks go to those who said such nice things about us, including the below comment which sums up what we consider [...]

    Read more >
+44 203 968 0500
+44 7887 710 950