Building Law Monthly
Excluding liability for wasted expenditure
In
Soteria Insurance Ltd (formerly CIS General Insurance Ltd) v IBM UK Ltd [2022] EWCA Civ 440, the Court of Appeal held that the words “loss of profit, revenue, savings” were not apt to exclude liability
in respect of a claim for wasted
expenditure caused as a result of the termination of the works. The point is one of some
significance should a party wish to exclude liability in respect of such losses. The Court of Appeal insisted that clear words
must be used if liability is effectively to be excluded. Given the emphasis on the need for clear words, this suggests that
a party wishing to exclude claims in respect of wasted expenditure would be well advised to say so expressly in the relevant
exclusion clause. The decision also highlights the need to take care when drafting caps on liability, particularly where the
contract contains more than one cap. In such a case it is necessary to give careful thought to the circumstances in which
the relevant cap is triggered and whether the caps can be aggregated or whether they operate in isolation from one another.