Q&As

What do gross negligence, wilful misconduct and deliberate default mean in commercial law?

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Published on LexisPSL on 30/10/2015

The following Commercial Q&A provides comprehensive and up to date legal information covering:

  • What do gross negligence, wilful misconduct and deliberate default mean in commercial law?
  • Gross Negligence
  • Wilful misconduct and deliberate default
  • What if the contract is silent?

What do gross negligence, wilful misconduct and deliberate default mean in commercial law?

The parties to commercial contracts sometimes agree that exclusion and limitation of liability provisions will not apply if one of the parties has deliberately breached the contract or been so negligent that it would be unfair to protect them from liability.

Over the years, a range of contractual language has been used to describe such conduct. None of the common terms have an established legal meaning (and are often not defined in the contract) and the courts are left to decide what exactly the parties intended.

This Q&A explains how the courts have interpreted three of the most common formulations:

  1. gross negligence

  2. wilful misconduct

  3. deliberate default

It also explains the default position in relation to deliberate breaches if the contract is silent.

Gross Negligence

Although negligence is a term which is clearly understood in tort, there is no English law concept of gross negligence (other than in criminal law) and so the courts will seek to give meaning to the term based on the terms of the contract in which it is used.

Two cases in particular provide helpful guidance:

In Camerata Property v Credit Suisse Securities (Europe) Limited, Justice Andrew Smith held:

'the relevant question … is not whether generally gross negligence is a familiar concept in English civil law, but the meaning of the expression in [the contract]. …

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