GLOSSARY
Exclusion clause definition
What does Exclusion clause mean?
An exclusion clause is a clause that excludes or restricts liability for non-performance or default in performance of a contractual obligation.
Commercial
A contractually agreed limit on liability for non-performance of an agreement and a defence to the extent permitted by law.
An exclusion clause is a clause that excludes or restricts liability. Therefore, it is a clause under which a party seeks to exclude or limit its liability for non-performance of the contract. For example, such a clause may set a monetary cap on liability or restrict or exclude the rules of procedure or evidence.
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Exclusion and limitation of liability
This Practice Note considers exclusion and limitation of liability in business-to-business (B2B) contracts. It provides guidance on the common law and statutory controls affecting exclusion and limitation of liability clauses (also known as limitation of liability clauses, limitation clauses, exclusion of liability clauses, exclusion clauses and exemption clauses), including the provisions of the Unfair Contract Terms Act 1977 (UCTA 1977) and the Misrepresentation Act 1967 (MA 1967).It looks at what types of clauses constitute exemption clauses and the three key issues to consider when drafting such clauses or analysing them in a dispute:•incorporation•construction, and•statutory controlsIt also considers the court’s approach to the exclusion or limitation of liability for certain types of breach (eg fundamental breach) and types of loss (eg direct loss, indirect and consequential loss, loss of profits, loss of use and loss of data), some of the common ways in which parties exclude or limit liability (eg financial caps, time bars, excluding rights of set-off) and exemption clauses and third parties.For an overview of each section in this Practice Note and links to summaries of the key issues addressed, see: Quick view—contents and navigation below.In this Practice Note, exclusion and limitation of liability clauses are collectively referred to as ‘exemption clauses’.Drafting and negotiating exemption clausesFor a checklist of issues to consider when drafting or negotiating
Insurance litigation—France—Q&A guide
Insurance litigation—France—Q&A guide This Practice Note contains a jurisdiction-specific Q&A guide to insurance litigation in France published as part of the Lexology Getting the Deal Through series by Law Business Research (published: March 2022). Authors: Kennedys Law LLP—Nicolas Bouckaert; Aurélia Cadain 1. In what fora are insurance disputes litigated? In France, insurance disputes are litigated in the following fora: • first instance civil courts; • first instance commercial courts; • courts of appeal; and • the French Supreme Court (the Court of Cassation). To identify which of the above fora has jurisdiction at first instance it is necessary to verify the identity of the parties (whether the parties are deemed to be commercial or civil entities). If all the parties are commercial entities, the dispute must be brought before the commercial court that has territorial jurisdiction, regardless of the amount of the claim. However, commercial entities can choose to bring their disputes before another commercial court or indeed a civil court, provided they entered into a valid choice of jurisdiction clause. If all the parties involved are civil entities, the dispute must be brought before civil courts. Note that since decree No. 2019-912, which came into force on 1 January 2020, the organisation of French first instance civil courts has been simplified: before the 1 January 2020, claims brought before civil courts would either be brought before the County Court or the High
Contract cases—2016 in review [Archived]
Contract cases—2016 in review [Archived] ARCHIVED: this archived Practice Note is not maintained and is for background information purposes only. Further, some of the links may not direct you to the provisions as at the date the guidance in this Practice Note was published. Key contract cases for 2016—what do you need to know? The year 2016 has seen a number of issues considered in the Court of Appeal and the Supreme Court on some key areas of contract dispute. In this review of 2016, we consider: • the end of anti-oral variation clauses? (Globe Motors, Rock Advertising)—see below • creating contracts by conduct (Reveille v Anotech)—see below • when contracts must come to an end (MSC Mediterranean v Cottonex)—see below • limiting and excluding liability (Transocean Drilling, Star Polaris, Impact Funding, Nobahar-Cookson)—see below • when are Wrotham Park damages available? (One Step v Morris-Garner)—see below • damages for deceit (OMV Petrom v Glencore)—see below The end of anti-oral variation clauses? (Globe Motors, Rock Advertising) Two cases in 2016 saw Court of Appeal decisions concerned with the efficacy of anti-oral variation clauses. In Globe Motors v TRW Lucas Varity the parties had entered into an agreement that contained an anti-oral variation clause, ie that only variations agreed to by the parties in writing were permitted. The issue for the Court of Appeal was whether this precluded purported variation of the contract either by words or conduct. Although
Trust disputes—breach of trust
Trust disputes—breach of trust It is a fact of life that beneficiaries and trustees fall out. Often this is due to misunderstandings but occasionally beneficiaries may consider proceedings either to restore a trust fund or obtain compensation on the basis that the trustees have exceeded their authority or failed to exercise their duty of care. Before taking those proceedings, those instructed to take action should consider a number of points, namely whether: • the act complained of is a breach of trust (or breach of fiduciary duty) • there is a quantifiable loss and a readily identifiable link from the breach to the loss • there is a commercial prospect of recovery from the trustee(s) • the claim is outside the limitation period • there is an exclusion clause that enables the trustee to escape liability • is the trustee likely to be granted relief • is the beneficiary guilty of acquiescence If the first four can be answered positively and the latter three negatively, there may be a justifiable claim. Breach of trust v breach of fiduciary duty There is a distinction between these two forms of breach. A breach of trust is the breach of duty imposed on a trustee by the trust instrument, by statute or through case law. It is an act or omission that is contrary to a trustee’s duties. A breach of fiduciary duty can be committed by not only trustees but
The Contracts (Rights of Third Parties) Act 1999 in construction contracts
The Contracts (Rights of Third Parties) Act 1999 in construction contracts This Practice Note looks at the key features of the Contracts (Rights of Third Parties) Act 1999 (C(RTP)A 1999), and how third party rights are used in construction contracts. It considers how third party rights are used as an alternative to collateral warranties, the nature of the rights that are actually granted to third parties and how to deal with step-in rights in this context. The C(RTP)A 1999 came into being following the Law Commission Report: ‘Privity of Contract: Contracts for the benefit of Third Parties’ (1996) which reviewed the doctrine of privity of contract and made recommendations for its reform. The C(RTP)A 1999 came into force in November 1999 and applies to contracts entered into on or after 11 May 2000. The C(RTP)A 1999 provides an alternative to collateral warranties and, in a construction context, makes it possible to include drafting in building contracts, consultant’s appointments and sub-contracts which confers rights upon third parties who would otherwise have only been able to acquire such rights by virtue of a collateral warranty. Does the C(RTP)A 1999 abolish privity of contract? The C(RTP)A 1999 creates an exception to the rule of privity of contract, ie that only the parties to a contract can acquire rights under it or have obligations imposed upon them under it. In general, this
Public M&A—Mexico—Q&A guide
Public M&A—Mexico—Q&A guide This Practice Note contains a jurisdiction-specific Q&A guide to public M&A in Mexico published as part of the Lexology Getting the Deal Through series by Law Business Research (published: October 2021). Authors: Nader Hayaux & Goebel—Julián Garza; Luciano Pérez G 1. How may publicly listed businesses combine? Mexican and foreign entities may use different structures to implement a business combination. The most common structures are equity acquisitions, asset transfers or legal mergers. Stock purchases and asset transfers are regulated by Mexican law, permitting terms and conditions thereof to be generally agreed by the parties. Legal mergers consist of the combination of two or more Mexican entities, where one entity (the merging entity) ceases to exist and the surviving entity acquires all of its assets and liabilities, or alternatively, in the combination of two or more entities, all of which cease to exist, and a new entity is created with all the assets and liabilities of the merging entity. In the acquisition of shares or merger of publicly traded companies, the bidder will be required to obtain the authorisation from the National Banking and Securities Commission and from any of the two authorised Mexican stock exchanges (MSEs) to issue an acquisition public offer through a tender offer. Once the bidder has launched the tender offer, the shareholders of the target entity are entitled to accept or reject
Commercial annual round-up: reviewing 2017 and previewing 2018 [Archived]
Commercial annual round-up: reviewing 2017 and previewing 2018 [Archived] ARCHIVED: This Practice Note has been archived and is not maintained. This year’s annual round-up reviews some of the most significant developments of 2017 and previews what is on the horizon for 2018. This includes the cases of Wood v Capita Insurance Services Limited [2017] UKSC 24 and Ilkerler Otomotiv Sanayai Ve Ticaret Anonim Sirketi v Perkins Engines Company Ltd [2017] EWCA Civ 183, among others. Also included are updates on LexisNexis®’s content, including news of exciting developments from the past year and what is coming up in the next 12 months. Reviewing 2017 Contract law What happened in Wood v Capita Insurance Services Limited? The Supreme Court held in Wood v Capita Insurance Services Limited [2017] UKSC 24 that the appellant, which had purchased a company from the respondent, could not recover compensation it subsequently had to pay to the company’s customers who had been affected by mis-selling before it took over the company. The court found that, properly construed, the indemnity clause in the purchase agreement did not apply to the compensation, save to the extent that it arose out of claims or complaints. What are the key implications? In a unanimous verdict, the Supreme Court held that on the approach to contractual interpretation, the decisions in Rainy Sky SA v Kookmin Bank [2011] UKSC 5 and Arnold v Britton [2015]
Negotiating a building contract—design issues
Negotiating a building contract—design issues This Practice Note is a negotiation guide, looking at some of the most common issues that arise in relation to design in the drafting and negotiation of building contracts. It looks at provisions that are commonly proposed during the negotiation of a building contract, at the issues that provisions that the employer includes in the draft building contract can cause for the contractor and how the contractor will typically respond to them. It also considers how, in order to be able to agree the building contract, the parties might be able to resolve these design-related issues and, where possible, reach a compromise position that is acceptable to them both. This Practice Note does not focus on a particular form of building contract, the draft contract in which these issues could arise might be a standard form with schedule of amendments or a bespoke form of contract. For ease of reference, this Practice Note uses the expressions ‘Employer’s Requirements’ (ERs) to refer to the document(s) produced by the employer to set out its requirements in relation to the project and ‘Contractor’s Proposals’ (CPs) to refer to the document(s) produced by the contractor setting out its proposals for the delivery of the project set out in the employer’s requirements (usually submitted to the employer as part of its tender). These are the expressions used
Exclusion and limitation of liability
Exclusion and limitation of liability This Practice Note considers exclusion and limitation of liability in business-to-business (B2B) contracts. It provides guidance on the common law and statutory controls affecting exclusion and limitation of liability clauses (also known as limitation of liability clauses, limitation clauses, exclusion of liability clauses, exclusion clauses and exemption clauses), including the provisions of the Unfair Contract Terms Act 1977 (UCTA 1977) and the Misrepresentation Act 1967 (MA 1967). It looks at what types of clauses constitute exemption clauses and the three key issues to consider when drafting such clauses or analysing them in a dispute: • incorporation • construction, and • statutory controls It also considers the court’s approach to the exclusion or limitation of liability for certain types of breach (eg fundamental breach) and types of loss (eg direct loss, indirect and consequential loss, loss of profits, loss of use and loss of data), some of the common ways in which parties exclude or limit liability (eg financial caps, time bars, excluding rights of set-off) and exemption clauses and third parties. For an overview of each section in this Practice Note and links to summaries of the key issues addressed, see: Quick view—contents and navigation below. In this Practice Note, exclusion and limitation of liability clauses are collectively referred to as ‘exemption clauses’. Drafting and negotiating exemption clauses For a checklist of issues to consider when drafting or negotiating
Enquiries before contract
Enquiries before contract Coronavirus (COVID-19): This Practice Note contains guidance on subjects potentially impacted by the government’s response to the COVID-19 outbreak. For updates on key developments and related practical guidance on the implications for lawyers, see Practice Note: Coronavirus (COVID-19)—implications for property [Archived]. Introduction Enquiries before contract play a part in various scenarios; for example, they are raised by a purchaser on the acquisition of freehold or leasehold land, by a tenant before the grant of a new lease, by a mortgagee before taking a charge over land or by a landlord before accepting a surrender of a lease. This Practice Note looks at the role of enquiries in the due diligence process and what to do when faced with preliminary enquiries in commercial property transactions. For simplicity, reference here will be made to seller and buyer although this can include landlord and tenant or mortgagor and mortgagee as appropriate. What are enquiries before contract? Enquiries before contract (also called pre-contract enquiries or preliminary enquiries) form part of the due diligence carried out by a prospective buyer in a property transaction. Although enquiries before contract are often treated as a stand-alone part of the due diligence process, there is a degree of overlap with a buyer’s title investigation, searches and contract negotiation. Enquiries before contract take the form of questions asked directly of the seller by the buyer (although almost
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Do/can you use a ‘Rights of Third Parties’ clause in trust documents, eg a deed of appointment appointing trust assets to a beneficiary, and if so is it likely to be enforceable, or are these clauses only used in contracts/commercial transactions?
Do/can you use a ‘Rights of Third Parties’ clause in trust documents, eg a deed of appointment appointing trust assets to a beneficiary, and if so is it likely to be enforceable, or are these clauses only used in contracts/commercial transactions? The applicability of ‘Rights of Third Parties’ clauses to trust documents The issue in this Q&A is whether a ‘Rights of Third Parties’ clause can be used in trust documents, such as a deed of appointment appointing trust assets to a beneficiary. If so, is it likely to be enforceable, or are such clauses only used in contracts/commercial transactions. ‘Rights of third parties’ clauses The Q&A refers to the standard clause inserted in contracts since the enactment of the Contracts (Rights of Third Parties) Act 1999 (C(RTP)A 1999). The clause is generally to the following effect: ‘Contractual rights of third parties No person who is not a party to this agreement shall have any right under the Contracts (Rights of Third Parties) Act 1999 to enforce any of the terms of this agreement.’ Alternatively, it may be more detailed and need not mention the C(RTP)A 1999: ‘Except as otherwise expressly provided in this Agreement/Deed, the parties hereto intend that this Agreement/Deed will not benefit, or create any right or cause of action, on behalf of any person other than a party to this Agreement/Deed
Will ambiguous drafting of standard terms and conditions be construed against the originator?
Will ambiguous drafting of standard terms and conditions be construed against the originator? The basic approach of contract interpretation as provided by Lord Hoffmann’s five principles in Investors Compensation Scheme (see Practice Note: Contract interpretation—the guiding principles) is supplemented by general guidelines (known as 'canons of construction') which can be used to assist in ascertaining the meaning of a written contract. The contra proferentem principle is one of those canons of construction. Where there is doubt about the meaning of a contract, the contra proferentem principle is applied, where the ambiguity identified cannot be resolved through other methods of construction. The words under review will be construed against the the proferens (either the party who put the clause forward or who benefits from it). Recent case law suggests that the principle has 'little utility' in commercially
What do the words ‘defend, indemnify and hold harmless’ mean?
What do the words ‘defend, indemnify and hold harmless’ mean? Contractual words and phrases such as the term 'defend, indemnify and hold harmless' have no single meaning and must be construed in the context in which they are used. Accordingly, the meaning of this term will ultimately depend on the specific circumstances. However, it can be helpful to look at decided cases for a general idea of how the courts may approach interpretation. This Q&A is divided into three sections: • ‘defend, indemnify and hold harmless’ and the meaning given to that phrase in a Supreme Court case in 2010 • ‘defend’ and its potential meaning, and • further reading Defend, indemnify and hold harmless The phrase ‘defend, indemnify and hold harmless’ was considered by the Supreme Court in Farstad Supply AS v Enviroco Ltd. The court found that the words operated as both: • an indemnity against third party claims, and • an exclusion clause against direct liability from the other party to the contract This finding was heavily influenced by the way in which the words were used in the contract (which were included within other clauses in the same contract). The facts were that the owner of an oil-rig supply ship sued Enviroco for negligence following a fire. Enviroco had been engaged by the charterer of the vessel, Asco, to carry out maintenance work. One of the questions to be resolved in
What is the required form of statement in the acquisition, disposal or transfer of ownership exception in regulation 4(i) of the Business Contract Terms (Assignment of Receivables) Regulations 2018, SI 2018/1254?
What is the required form of statement in the acquisition, disposal or transfer of ownership exception in regulation 4(i) of the Business Contract Terms (Assignment of Receivables) Regulations 2018, SI 2018/1254? The Regulations The general law is that the parties to a contract can restrict or prohibit the ability to assign rights arising under the contract. The law on the assignment of receivables was, in certain circumstances, altered by the Business Contract Terms (Assignment of Receivables) Regulations 2018 (Assignment of Receivables Regulations), SI 2018/1254 which came into force on 23 November 2018. The Assignment of Receivables Regulations, SI 2018/1254 were passed pursuant to powers conferred by sections 1 and 161(2) of the Small Business, Enterprise and Employment Act 2015 and apply to contracts entered into on or after 31 December 2018. The effect of the Assignment of Receivables Regulations, SI 2018/1254 is to invalidate restrictions or prohibitions on the assignment of receivables in certain types of contract. A ‘receivable’ is defined in the Assignment of Receivables Regulations, SI 2018/1254, reg 1(3) as a right (whether or not earned by performance) to be paid any amount under a contract (other than a contract mentioned in the Assignment of Receivables Regulations, SI 2018/1254, reg 4) for the supply of goods, services or intangible assets. The prohibition and the exceptions The prohibition on a non-assignment of receivables term is contained in the
Can you point me to recent case law concerning the court's approach to the validity of notices served under a share purchase agreement?
Can you point me to recent case law concerning the court's approach to the validity of notices served under a share purchase agreement? Set out below are recent cases concerning the validity of notices served under a share purchase agreement (SPA). In the case of Treatt v Barratt, the Court of Appeal considered whether an earn-out notice was valid. The notice had been correctly served by the buyer and the seller did not invoke the SPA dispute resolution provisions in respect of the notice so served. However, the seller claimed that the notice itself was invalid, thus it would not be bound by the buyer's valuation. The SPA provided for the earn-out to be calculated by reference to the pre-tax profit of the two groups of companies sold as ascertained from the audited accounts of each group for two calendar years ending 31 December 2011. However, following completion the buyer changed the accounting reference date of the groups (aligning them with its own accounting reference date) and therefore instead of basing the calculation on audited accounts as required, it based the calculation on audited consolidated accounts of the buyer for a different period and upon management accounts. The Court of Appeal held that the relevant provision in the SPA required the calculation contained in the notice to be based upon the audited accounts and therefore the notice
Why do some limitation of liability clauses in commercial agreements exclude liability for loss of: profit; revenue (or turnover); and business; what do each of those exclusions potentially cover and is it useful to refer to all of those heads of loss when seeking to exclude financial liability? To what extent do they cover the same losses?
Why do some limitation of liability clauses in commercial agreements exclude liability for loss of: profit; revenue (or turnover); and business; what do each of those exclusions potentially cover and is it useful to refer to all of those heads of loss when seeking to exclude financial liability? To what extent do they cover the same losses? Limitation of liability/exclusion clauses Commercial contracts will usually include an exclusion or limitation of liability clause. An exclusion clause is one which excludes all liability for certain breaches of the contract. A limitation of liability clause is one which limits the liability of a party. This can be in a variety of ways such as restricting the type of loss recoverable or the remedies available, imposing a time limit on any claims for breach or capping the amount payable for breach. See Practice Note: Exclusion and limitation of liability. Any such clauses will need to be interpreted alongside the usual rules on causation and remoteness of damages. See Practice Note: Causation and remoteness in contractual breach claims. Section 3 of the Unfair Contract Terms Act 1977 can apply a reasonableness test to a clause in a commercial contract which purports to limit or exclude a party’s liability if it is contained in that party’s standard terms. See Practice Note: Exclusion and limitation of liability—Liability arising in contract. Such clauses are part of
If Company A endorses Company B or a trader to a consumer, is there any risk it could be sued by the consumer if Company B or trader does not act in accordance with the contract. Could that risk be mitigated if Company A incorporates an exclusion clause in their endorsement?
If Company A endorses Company B or a trader to a consumer, is there any risk it could be sued by the consumer if Company B or trader does not act in accordance with the contract. Could that risk be mitigated if Company A incorporates an exclusion clause in their endorsement? We have assumed that: • Company A endorses the goods/services of Company B to a consumer, and the consumer enters into a contract with Company B pursuant to the endorsement • there is no contract between company A and the consumer Liability of Company A under the contract between the consumer and Company B/the trader Under the rules of privity of contract, only parties to a contract are able to enforce rights and obligations against each other (see Practice Note: Third party rights—the common law doctrine of privity of contract). This means that under the privity of contract doctrine, in the scenario described, the consumer could not sue Company A to enforce Company B’s obligations under the contract. The doctrine of privity of contract provides that a contract can only be enforced by a party to that contract. There are numerous exceptions to the doctrine. One such exception is the Contracts (Rights of Third Parties) Act 1999 (C(RTP)A 1999). C(RTP)A 1999 allows a third party to enforce a contract where the contract itself either expressly provides for this or
Do you have any resources on the on the definition of ‘revenue’ in a commercial contracts setting?
Do you have any resources on the on the definition of ‘revenue’ in a commercial contracts setting? We have been unable to find any legal authority for a definition of ‘revenue’. Contract terms will be construed and interpreted in accordance with the general principles and rules of contract interpretation as established by a considerable body of case law. Much will depend on the context and factual background of the agreement in which the term is used. A simplified and brief summary of these principles is provided in Practice Note: General rules of contract interpretation—summary. ‘Revenue’ is often equated with ‘income’ or ‘turnover’ and is generally understood to mean the total amount of income received or generated by a business. A company can be receiving or generating revenue but not be making a profit. Debts and liabilities are generally not deducted when calculating revenue, whereas they are when calculating profits. ‘Revenue’ may typically be referred to in the context of an exemption clause. For examples, see Practice Note: Exclusion and limitation of liability, in particular section: Quick view—types of loss. See also, Q&A: Why do some limitation of liability clauses in commercial agreements exclude liability for loss of: profit; revenue (or turnover); and business; what do each of those exclusions potentially cover and is it useful to refer to all of those heads of loss when seeking to exclude financial
Is there any authority on the meaning of ‘loss of revenue’ and ‘loss of business’ in the context of exemption clauses in commercial contracts? What factors should be taken into account when considering their inclusion? Would ‘loss of revenue’ or ‘loss of business’ cover different types of loss than those covered by an exclusion of ‘loss of profit’?
Is there any authority on the meaning of ‘loss of revenue’ and ‘loss of business’ in the context of exemption clauses in commercial contracts? What factors should be taken into account when considering their inclusion? Would ‘loss of revenue’ or ‘loss of business’ cover different types of loss than those covered by an exclusion of ‘loss of profit’? Where a commercial contract contains a clause excluding liability for items such as loss of revenue, loss of business or loss of profit where the loss is caused by the negligence or breach of duty of the other party, such clause will usually be termed an exclusion or an exemption clause. The purpose of such a clause is to provide that where a breach of contract (or negligence) arises which causes loss, that loss should not be recoverable. Such clauses often lead to litigation and thus the scrutiny of the terms of the clause. Exclusion clauses may also be used to limit compensation by amount or duration, or to exclude what would otherwise be implied into the terms of a contract. Most judicial consideration of the terms ‘loss of revenue’, ‘loss of business’ and other terms has been submerged in broader discussions of a variety of exemption clauses which purport to additionally exclude liability for ‘loss of profit’. These terms are often listed within exemption clauses but rarely
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Clarity on wasted expenditure exclusions (Soteria (formerly CIS) v IBM)
TMT analysis: A recent judgment of the Court of Appeal clarifies the principles regarding the recovery of wasted expenditure claims. While wasted costs often form part of a subsequent loss of profit claim, the judgment confirms that the two forms of loss are separate and distinct. Consequently, in order to be effective, exclusion clauses must specifically refer to wasted costs. Exclusions in respect of loss of profits claims will not effectively exclude such claims. Written by Jonathan Smart, partner, Phil Tansley, partner, and John Shirley, associate, at Shoosmiths.
Commercial weekly highlights—7 April 2022
This week’s edition of Commercial weekly highlights includes: analysis of the High Court decision in Tulip Trading Ltd v Van der Laan considering fiduciary duties, a decision from the Court of Appeal on loss of profits and wasted expenditure in Soteria Insurance Ltd (formerly CIS General Insurance Ltd) v IBM, analysis of the withdrawal of western brands from Russia from a franchising perspective, new rules on advertising gambling from the ASA and CAP, and the latest ASA rulings.
TMT weekly highlights—7 April 2022
Welcome to this week’s edition of the TMT weekly highlights: a hand-picked summary of news analysis, updates and new content from across the technology, media and telecoms sectors. These highlights focus on key topics including new technologies, software, cloud computing, internet, outsourcing, music, film & television, publishing, defamation and telecoms.
Dispute Resolution weekly highlights—7 April 2022
This week’s edition of Dispute Resolution weekly highlights includes: analysis of a number of key DR developments and key judicial decisions including the Court of Appeal in Soteria Insurance Ltd v IBM (exclusion clauses and wasted expenditure), Samsung v LG (permission to serve out in a contribution claim) and Chelfat v Hutchinson (service and Form N510) as well as the decision in JSC Commercial Bank Privatbank v Kolomoisky (adjourning trial due to the Ukraine conflict); dates for your diary; details of our most recently published content; and other information of general interest to dispute resolution practitioners.
Allianz sues Exeter over coverage for WWII bomb
Law360, London: Insurer Allianz has sued the University of Exeter, seeking a declaration that it does not have to cover damages due to the controlled explosion of a World War II bomb unearthed near student accommodations during construction works.
The effects of the Ukraine war on cybersecurity and GDPR
Information Law analysis: What are the likely effects of the war in Ukraine on cybersecurity and related obligations under EU and UK data protection laws? Written by André Bywater and Jonathan Armstrong, solicitors, of Cordery in London where their focus is on compliance issues.
Australia—Coronavirus (COVID-19) business interruption insurance—insurers win appeals in second ICA test case and Star Casino claim
Insurance & Reinsurance analysis: The Full Court of the Federal Court of Australia (three judges) (the ‘Full Court’) has generally confirmed the first instance decisions in the Second ICA Test Case and the Star Casino Claim—largely agreeing that the insurers are not liable for certain claims arising from coronavirus (COVID-19)-related interruptions to business. The decisions (which may yet be appealed to the High Court) confirm that there are severe limitations on the types of policies which respond to coronavirus-related financial loss and the circumstances in which a policyholder will be able to recover such loss. Mark Darwin, partner, and Travis Gooding, senior associate, both at Herbert Smith Freehills, summarise the key issues dealt with by the Full Court and the limited scope that remains for policyholders to claim their loss.
Insurance & Reinsurance weekly highlights—10 February 2022
This week's edition of Insurance & Reinsurance weekly highlights includes updates relating to market practice; regulatory developments; dates for your diary and other news highlights reported over the past week.
Estoppel by convention and interpreting unusual terms (ABN AMRO Bank NV v Royal and Sun Alliance Insurance plc)
Insurance & Reinsurance analysis: The Court of Appeal was called on to consider two related appeals in respect of contracts for marine insurance that unusually insured a bank against (among other things) lost profits where its client failed to comply with the terms of a financial product offered by the bank. The first appeal concerned the proper construction of the unusual term and whether there was sufficient in factual matrix to displace the clear and unambiguous express term which the judge found provided for insurance against lost profits, notwithstanding the unusual nature of such a term in the marine insurance industry. The second appeal was by a broker against a finding that they were liable to the bank in breach of contract and negligence by reason of failing to ensure that two of the twelve underwriters were aware of the full terms including the term insuring the Bank in respect of lost profits. The second appeal engaged consideration of the scope of the doctrine of estoppel by convention. Written by Lauren Godfrey, barrister at Gatehouse Chambers.
Australia—A closer look at SMEs in the construction PI insurance market—their risk profile, their approach to insurance and the types of claims they are experiencing
Insurance & Reinsurance analysis: Small and medium-sized enterprises (SMEs) make up the majority of businesses worldwide. According to the ABS Swiss Re Institute, in Australia SMEs account for 99.8% of businesses, with construction based SMEs making up 14% of the SME market. When looking at professional indemnity (PI) insurance through the lens of a construction SME, there are particular drivers of purchase power and influences unique to the SME market. The coronavirus (COVID-19) pandemic has created a new set of challenges and compounded an already challenged construction PI market still recovering from the recent departure from the PI market of Lloyd’s syndicates and the cladding fallout following Grenfell in the UK and Lacrosse in Australia. Sarah Metcalfe, Special Counsel and Maxine Tills and Nicole Wearne, both partners at Clyde & Co, look at the risks currently faced by construction-based SMEs, the approach construction-based SMEs take to insurance and current claim trends in construction PI.
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