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International Construction Law Review

EXCLUSIONS FOR INDIRECT AND CONSEQUENTIAL LOSS: ENGLISH LAW ON THE BRINK OF CHANGE?

ADRIAN BELL

Partner and Solicitor Advocate, CMS, London (Adrian.Bell@cms-cmno.com)

AIDAN STEENSMA

Of Counsel, CMS, London (Aidan.Steensma@cms-cmno.com)

NATALIE HALL

Associate and Solicitor Advocate, CMS, London (Natalie.Hall@cms-cmno.com)
Exclusions of liability for “indirect” or “consequential” loss are commonplace in construction and engineering contracts, appearing in many standard forms, including the FIDIC suite,1 the LOGIC General Conditions of Contract for Construction,2 and the NEC.3 English law has given a specific meaning to such exclusions, limiting their application to losses falling within the second limb of Hadley v Baxendale.4 The narrowness of this approach has been subject to growing criticism of late. Other common law jurisdictions have departed from it and a recent Commercial Court decision appears to be the first considered refusal to apply it in England. This article considers the extent to which these developments provide a basis for challenging the existing English law position, particularly in light of what appears to be an increasing judicial willingness to interpret contracts with a greater degree of literalism and to give exclusion clauses their fair and natural reading.


Pt 3] Exclusions for Indirect and Consequential Loss

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