CONSTRUCTION OF A COMPROMISE AGREEMENT

Mostcash plc v Fluor Ltd [2002] EWCA Civ 975; [2002] BLR 411

In Mostcash plc v Fluor Ltd [2002] EWCA Civ 975; [2002] BLR 411 the Court of Appeal adopted a narrow interpretation of the decision of the House of Lords in Bank of Credit and Commerce International SA v Ali [2001] UKHL 8 and held that the words ‘any cause of action that may in future accrue … for any future defect’ were effective to bar all contractual claims brought by the claimants against the defendants, whether or not the claimants were aware of the existence of these claims at the time of entry into the compromise agreement. The Court of Appeal held that the crucial factor in BCCI v Ali was that the cause of action which the claimant was seeking to pursue was one which was not known to the law at the time of the release and so could not have been within the contemplation of the parties at the time of entry into the release. This represents a very narrow reading of the decision in Ali and it underlines the need to take care when entering into a compromise agreement to ensure that the release does not extend to claims which it was not intended to release.