Exclusion clauses — they will work if they are clearly drafted
The Technology and Construction Court (TCC) has reaffirmed the approach to be taken to the construction of exclusion and limitation of liability clauses, in the case of Fujitsu Services Ltd v IBM United Kingdom Ltd .
The dispute related to a contract for the provision of information technology services to the DVLA. IBM was responsible for providing these services, under an agreement which IBM had acquired from PwC when it purchased PwC’s consultancy business. IBM subcontracted aspects of the services to Fujitsu. Fujitsu claimed that IBM had committed various breaches of the sub-contract, for which it claimed damages for loss of profits in the region of £36m. IBM defended the claim on various bases, including by reference to exclusion and limitation of liability clauses in the sub-contract.
The sub-contract included a limitation of liability clause which confirmed that IBM’s aggregate liability was to be limited to £5m each ‘Contract Year’, with an overall aggregate liability for ‘all claims or losses arising under this sub-contract’ to be limited to £10m (clause 20.4). There was an exclusion of liability at clause 20.7 of the sub-contract, which provided as follows…
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