UK: Interpreting Limitation And Exclusion Of Liability Provisions

Last Updated: 1 February 2016
Article by Tim Mould

Last month the Judge in charge of the Technology and Construction Court handed down Judgment in Persimmon Homes Ltd & others v Ove Arup & Partners Ltd & another [2015] EWHC 3573 (TCC).  The Judgment concerned in part the interpretation to be given to limitation and exclusion of liability provisions within Arup appointments/warranties. It is a useful summary of well established principles concerning how the Courts approach interpreting such provisions.  It also illustrates the increased weight given by the Courts, when they decide interpretation disputes, to the parties' decisions on risk allocation.

Summary of the Facts

Arup advised a consortium that developed a site at Barry Docks in Cardiff.  When site works commenced asbestos was discovered.  The consortium brought a claim against Arup for breach of contract and negligence – it being alleged that Arup had failed to warn the consortium of the asbestos.

The relevant limitation and exclusion of liability provisions were in the following Clause 6.3:

"The Consultant's aggregate liability under this Agreement whether in contract, tort (including negligence), for breach of statutory duty or otherwise (other than for death or personal injury caused by the Consultant's negligence) shall be limited to £12,000,000.00 (twelve million pounds) with the liability for pollution and contamination limited to £5,000,000.00 (five million pounds) in the aggregate.  Liability for any claim in relation to asbestos is excluded."

A central issue was whether the final sentence of the provisions excluded liability for negligence.

Why There was an Issue to be Decided

At first blush, it might seem odd that such a debate could even arise.  However, there is a line of authorities that where there is no express reference to negligence in an exclusion clause, the Court must consider whether the words used are wide enough to cover such an  exclusion.  Further, if a doubt arises on this point it must be resolved by the Court in favour of the other party.  The consortium also ran the argument that asbestos liabilities were a sub-set of pollution and contamination liabilities.

Courts approach interpretation questions with the presumption that neither party intends to abandon any remedies for a contract's breach, and that it will be inherently unlikely that the parties intend there will be no sanction for non-performance.  However, it is also firmly settled that if clear words are used in an exclusion clause they are to be given effect to.

The Court's Decision

Ultimately, the Court found in Arup's favour ie that the last sentence of Clause 6.3 excluded liability for claims relating to asbestos, whether in negligence or otherwise.  Further, that asbestos liabilities did not form part of pollution or contamination liabilities.  However, it was held that, even if they did, the exclusion would operate to carve out and exclude asbestos liabilities.

The Court reiterated that in its objective search for ascertaining the intention of the parties, its touchstone must be its determination of "what a reasonable person having all the background knowledge which would reasonably have been available to the parties would have understood the parties to have meant."  The rules of interpretation emphasised in the Judgment as being applicable were that:

  1. "The enquiry will start, and usually finish, by asking what is the ordinary meaning of the words used".
  2. The interpretation of exclusion or limitation provisions is essentially the same as when the Court interprets any other provision of a contract.
  3. Deference will be given to the parties to commercial contracts apportioning risk as they see fit (as opposed to the Court importing its notion of commerciality).  Material here was that Clause 6 was dealing with professional indemnity insurance and a set of provisions addressing the obtaining of insurance and the allocation of risk.  It is typically the case that, under professional indemnity policies, cover for asbestos will be excluded (unless it is the subject of a policy endorsement/additional premium) and/or such asbestos cover as is provided will be for a reduced limit to that generally applicable to the policy.
  4. Reference by the Courts to "business common sense", in order to decide a dispute over the "proper" interpretation, will be treated with caution.  This is because, on any particular facts, the answer may differ depending upon which party is being asked that question.
  5. Here, the Court rejected the consortium's argument that it was for Arup to put forward a sensible rationale for why it should be able to exclude asbestos liabilities.  Rather, "the proper question [was] whether the implications of Arup's interpretation shows that it is inconsistent with business common sense."  The Court was not attracted to the argument that the exclusion of asbestos liability was devoid of commercial purpose.  This was in part because any failure by Arup of its asbestos responsibilities would, irrespective of liability not thereby attaching to Arup, have still put it on risk of having its appointment terminated.

The Judgment in Context

In the past couple of years there have been several decisions on interpreting limitation and exclusion liability provisions that have rejected applying a literal interpretation of those provisions.  Those judgments all endorse the principles outlined above but, as with most interpretation disputes, are fact sensitive.  The answer reached by a Court will depend upon it taking stock of its view of all the matters just noted. This explains why, on this occasion, the last sentence of the limitation provisions was applied at face value.

The Judgment illustrates yet again the importance of drafting these types of provisions clearly and the criticality of the precise words used.  Part of the Court's reasoning was that "any claim in relation to [asbestos pollution or contamination]" was a wider exclusion than an exclusion simply of liability for asbestos pollution or contamination.  Against the backdrop of last year's Supreme Court decision in Arnold v Britton, the Judgment is an example of the Courts' approach on interpretation questions tending to now be to give greater weight than before to the selected wording of the provisions.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.