Exclusion clauses and the need for clear words

In South East Water Ltd v Elster Water Metering Ltd [2025] EWCA Civ 287 the Court of Appeal allowed an appeal from the decision of His Honour Judge Stephen Davies (on which see our April 2024 issue, pp 10-12) and held that the clause relied upon by the defendant by way of defence to the claim brought against it by the claimant only applied in the case where the claimant exercised the option given to it under the contract to require the defendant to replace the defective units. The clause did not apply to the claim in damages brought by the claimant. The Court of Appeal also attached importance to the fact that the defendant had failed to use sufficiently clear words to exclude liability where the claim brought was one for damages. The case acts as a reminder of the need to draft exclusion clauses with care in order to ensure, as far as possible, that the clause gives to the defendant protection in the event that it is found to be in breach of contract. The case also acts as a reminder of how difficult it can be to predict the outcome of cases of this type, given that Judge Stephen Davies reached a clear conclusion on the meaning of the terms at first instance, only for the Court of Appeal to reach a different conclusion on appeal.