UN­DER NO OBLI­GA­TION

Business Day - Business Law and Tax Review - - BUSINESS LAW & TAX REVIEW -

of prof­its, rev­enue, busi­ness, good­will, in­di­rect or con­se­quen­tial loss or dam­age …”. IBM’s li­a­bil­ity to Fu­jitsu was fur­ther capped to an amount of £5m in each con­tract year and £10m in ag­gre­gate for “any claims or losses”. The court held that the lan­guage of the lim­i­ta­tion of li­a­bil­ity clause was “on the face of it clear and un­am­bigu­ous” and that li­a­bil­ity for loss of prof­its, which in­clude work­share, change con­trol and money value claims, was ex­cluded. The ex­clu­sion was fur­ther read in the con­text of the en­tire ex­clu­sion clause and the con­tract as a whole, fur­ther hav­ing re­gard to the ma­te­rial back­ground and cir­cum­stances at the time the sub­con­tract was en­tered into.

In com­ing to its con­clu­sion, the court held that there was noth­ing in the con­tract and the con­text of the sur­round­ing clauses that pointed to any dif­fer­ent con­struc­tion than a sim­ple ap­pli­ca­tion of the lan­guage of the ex­clu­sion clause. The court fur­ther held that (i) the length and de­tail of the sub­con­tract; (ii) the so­phis­ti­ca­tion of the par­ties; (iii) the equal­ity of bar­gain­ing power be­tween the par­ties; (iv) the mu­tu­al­ity of the lim­i­ta­tion of li­a­bil­ity clause; (v) the avail­abil­ity of other reme­dies; (vi) the fact that both par­ties had re­ceived le­gal ad­vice; and (vii) as the full ex­clu­sion clause was tai­lor-made all con­trib­uted to sup­port­ing a straight­for­ward ap­pli­ca­tion of the lim­i­ta­tion of li­a­bil­ity clause. It was also held that an al­ter­na­tive, com­mer­cially sen­si­ble mean­ing could not be iden­ti­fied in favour of Fu­jitsu. Fu­jitsu ar­gued that: Li­a­bil­ity for a breach of IBM’s fidu­ciary duty was not ex­cluded by the

Pic­ture: THINK­STOCK

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