The court considered the effect of an exclusion from liability reading: ‘Exclusion and Limitations of Liability . . (c) Where the Company is in breach of its obligations in respect of the Services or under any Contract or any duties it may have as bailee of the Goods it shall have no liability to the Customer in contract, tort, negligence, breach of statutory duty or otherwise for any loss, damage, costs or expenses of any nature whatsoever incurred or suffered by the Customer which is of an indirect or consequential nature including without limitation the following:
(i) loss or deferment of profit;
(ii) loss or deferment of revenue;
(iii) loss of goodwill;
(iv) loss of business;
(v) loss or deferment of production or increased costs of production;
(vi) the liabilities of the Customer to any other party.’
Held: Where a party seeks to protect himself from liability for losses otherwise recoverable by law for breach of contract he must do so by clear and unambiguous language. Clause 9(c) provides that liability for such losses as are ‘of an indirect or consequential nature’ is excluded. In the light of the well-recognised meaning which has been accorded to such words in a variety of exemption clauses by the courts from 1934 to 1999 it would require very clear words indeed to indicate that the parties’ intentions when using such words was to exclude losses which fall outside that well-recognised meaning. This is particularly so when ‘indirect’ is used as well as ‘consequential’. The use of ‘indirect’ draws an implicit distinction with direct losses. The meaning which has been given to direct losses in the cases which I have mentioned is ‘loss which flows naturally from the breach without other intervening cause and independently of special circumstances’ (per Atkinson J in Saint Line[3] at page 103). By contrast, indirect or consequential losses are losses which are not the direct and natural result of the breach (per Atkinson J in Saint Line at page 104).
The important question therefore is whether the words in clause 9 ‘including without limitation the following’ indicate clearly that the parties were giving their own definition of indirect or consequential losses so as to include the specified losses even if they are the direct and natural result of the breach in question. In my judgment those words do not provide the sort of clear indication which is necessary for the defendant’s argument. The parties are merely identifying the type of losses (without limitation) which can fall within the exemption clause so long as the losses meet the prior requirement that they are ‘of an indirect or consequential nature’. Had the parties intended that liability for losses which were the direct and natural result of the breach could be excluded they would have hardly have described such losses as ‘indirect or consequential’.
Citations:
[2008] EWHC 225 (Comm), [2008] 1 Lloyds Rep 639
Links:
Jurisdiction:
England and Wales
Cited by:
Cited – Markerstudy Insurance Company Ltd and Others v Endsleigh Insurance Services Ltd ComC 18-Feb-2010
The claimant insurers alleged the mishandling of insurance claims by the defendant of many claims leading to substantial losses. The parties asked the court to determine a basis for calculation of damages under the contract.
Held: A similar . .
Lists of cited by and citing cases may be incomplete.
Personal Injury, Damages
Updated: 13 July 2022; Ref: scu.264525
