Words Matter - Excluding Liability For Wasted Expenditure

In a recent judgment, the Court of Appeal considered the proper construction of a clause that excluded liability for, among other things, "loss of profit, revenue [or] savings". The question (on which £80 million turned) was whether that clause also excluded a claim for wasted expenditure. We consider the impacts of the judgment in different sectors.

Summary

• When construing a contract, the court must consider the natural and ordinary meaning of the words used by the parties.
• Very clear words will be required to exclude liability – the more valuable the right, the clearer any exclusionary wording needs to be.
• Although wasted expenditure and loss of profit both seek to compensate a claimant, they are not the same. Clear words will therefore be needed to exclude liability for both.