Lawbite: the case against the Contra Proferentum Principle

• United Kingdom

• Litigation and dispute management
• Real estate
• Real estate dispute resolution

07-06-2017

Persimmon Homes Ltd & others v Ove Arup & Partners Ltd [2017] EWCA Civ 373

This case was an action by a consortium of developers against the engineers Ove Arup who had given warranties in respect of a potential development site in Barry, South Wales.  The warranties included a simple exclusion clause stating that “Liability for any claim in relation to asbestos is excluded”.  Once asbestos was found the development consortium took action against Ove Arup seeking damages claiming that it would have paid less for the site if Ove Arup had reported on the presence of asbestos.  The developers, faced with the exclusion clause, sought to rely on the contra proferentum rule, a rule of contractual interpretation by which any ambiguity in a clause is to be construed against the party seeking to rely on the drafting.  However the Court of Appeal held the natural meaning of the wording of the exclusion clause was to exclude all liability in relation to asbestos, and with such clear and unambiguous drafting the contra proferentum rule was not relevant.

Key points

• the latest in a line of recent cases criticising the contra proferentum rule and any place it might have in commercial contracts.  Variously described as a “rule of last resort”, as a rule raising “abstruse issues” and perhaps no longer retaining any “intellectual respectability”, it is clear that in a dispute over a commercial contract there is little hope for an action founded on the contra proferentum principle
• it is clear that the Courts will interpret and enforce exclusion clauses in commercial contracts, negotiated between parties of equal bargaining power, as straight-forwardly as those clauses are drafted.  So be very careful to mean what you say; it is very unlikely that there will be any help from the Courts to make what you say mean something different