A recent case has shown the importance of not just limiting the time for bringing contract claims but also making sure any liability is expressly extinguished at that point.
B had a warranty from M in relation to its role as sub-contractor engaged to clad a building owned by B. The warranty said B could not bring any claim against M under the warranty once a period of twelve years had passed. Thirteen years later cladding fell off B’s building. B sued the main contractor X realising he had a problem bringing a claim against M because of the twelve year period. X, however, joined M to the action under s1(1) Civil Liability (Contribution) Act 1978. M argued that it was not liable to B because of the time limit on the warranty and therefore should not be joined.
The Court decided that all the warranty said is that B could not bring a claim against M after 12 years. It did not explicitly state that M’s liability to B would be extinguished at that point. In the words of the Court that was a procedural bar of a right not a clause terminating that right. X could join M and ask for a contribution.
Exclusion clauses are a common feature of dealings between insolvency officeholders and third parties whether trading counterparties or buyers of businesses. The normal suite of exclusion clauses found in a sale and purchase agreement is all encompassing but that is not always the case in other dealings. The case serves as an important reminder to not just bar enforcement of a right after a relevant liability period but to make sure that right is extinguished so it cannot be pursued by third parties.