In a matter of great interest

This is a simple case note on Marketstudy Insurance Co & Ors -v- Endsleigh Insurance Services, which, if it is not overturned, will make all commercial lawyers and contract managers think again about limitations of liability.  The contract in dispute had a standard limitation of liability clause:

“Endsleigh’s total liability in contract, tort (including negligence or breach of statutory duty), misrepresentation, restitution or otherwise, arising in connection with the performance or contemplated performance of the Agreement shall be limited to the aggregate amount of fees received pursuant to clause 6.1 above.”

Despite the presence of the word “otherwise” in this clause, David Steel J. in the Commercial Court found that the limit of liability did not stretch to include any statutory interest awarded on any damages, as these arose from the exercise of the Court’s discretion.   This may be no more than an example of the application of the common law interpretation rule known by the Latin tag of eiusdem generis, which states that where a list of words is followed by a general word, then the general word is interpreted as being limited to concern the same type of things or subjects as those in the listed words.

Suppliers of goods or services seeking to limit their exposure under a contract to the total fees or consideration paid will therefore have to make express reference to interest in any limitation clause.

Alternatively, the interpretation clause in the contract should include a subclause to disapply the eiusdem generis rule so that use of phrases like “or otherwise” are not limited by the list of words preceeding them.

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