Q&As

With unpredictable markets following Brexit vote, can a firm be liable to its client in a transaction where a loss is sustained through currency fluctuation?

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Produced in partnership with David Sawtell of 39 Essex Chambers
Published on LexisPSL on 09/09/2016

The following Practice Compliance Q&A produced in partnership with David Sawtell of 39 Essex Chambers provides comprehensive and up to date legal information covering:

  • With unpredictable markets following Brexit vote, can a firm be liable to its client in a transaction where a loss is sustained through currency fluctuation?
  • Liability for currency fluctuations: the test of remoteness
  • The ability to bring a claim for damages in a different currency
  • Ways to limit liability for currency fluctuations
  • Further reading

With unpredictable markets following Brexit vote, can a firm be liable to its client in a transaction where a loss is sustained through currency fluctuation?

This Q&A answers the following questions:

  1. can a firm be liable to its client in a transaction where a loss is sustained through currency fluctuation arising from the firm's delay. What is the firm's potential liability in:

    1. negligence, or

    2. breach of contract (under any relevant implied terms)

  2. what if the loss arises out of a delay for which the firm is not responsible, eg delay on the part of the client or other party?

  3. what if there is no delay to the transaction, but there is a currency fluctuation causing loss during the expected/normal transaction duration period?

  4. can a firm limit its liability for claims arising out of the above scenarios eg through a clause in its Terms of Business?

Although the question refers explicitly to currency fluctuations following Brexit, practitioners encounter this kind of uncertainty and risk on a fairly regular basis. In 2015, we had to deal with the Greek government debt crisis and the possibility that it would leave the Eurozone.

It has been a well-established principle of English law since the 17th century that a debt payable at a future time involves an obligation to pay the nominal amount of the debt at the date of payment

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