- Construing exclusion clauses in context (Acerus v Recipharm)
- What are the practical implications of this case?
- What was the background?
- What did the court decide?
- Case details
Commercial analysis: In Acerus v Recipharm, Mr Justice Robin Knowles found that an exclusion clause in a pharmaceutical manufacturing agreement did not exclude liability for a failure to perform. The clause in question appeared at first blush to be a complete exclusion of liability (‘in no circumstances shall either party be liable to the other for…any loss of profit, business or contracts…arising from this Agreement’). But the court found that it was necessary to consider what a reasonable person with the background knowledge would have understood the parties to mean. In light of the commercial context, the exclusion clause was limited by reference to third party liability, not all liability under the agreement. The decision is a short illustration of the principle that words must be read in context. It also reveals the importance of evaluating the commercial consequences of different contractual interpretations. Written by Aarushi Sahore, pupil barrister at Brick Court Chambers.
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