The meaning of an arguably ambiguous exclusion clause in a contract has been considered by the Court of Appeal.
In Persimmon Homes Ltd v Ove Arup & Partners the Court of Appeal held that the exclusion clause which stated “liability for any claim in relation to asbestos is excluded” was sufficient to exclude liability for all claims relating to asbestos. This included negligence despite it not being specifically articulated.
While in this case the courts allowed the literal meaning of the exclusion, it is always recommended that exclusion clauses are clearly drafted to avoid the courts having to step in and potentially add meaning to words that were unintentional. Exclusion clauses should be considered in a wider context unless their wording clearly limits the claims that are being excluded. When interpreting such clauses, the courts will consider the language used as well as applying business common sense and will take the view that the clauses were included in order to allocate risk so should not be disregarded.
This decision also shows that the contra proferentum rule – a rule which penalises a party for being vague in a contract by encouraging the meaning to be interpreted against the best interests of the party – plays a limited role in circumstances where a commercial contract is negotiated by two parties on the same footing.