Originating from the case of Canada Steamship Lines Ltd v T… This doctrine can also be called the Ambiguity Doctrine. Similarly, the test for interpreting exclusion clauses in Canada Steamship now has little relevance in the context of commercial contracts. Statute may also impact the construction or effectiveness of exclusion clauses, ... and, where appropriate, construing the clause contra proferentem in case of ambiguity.” The same principles apply to the construction of limitation clauses: Darlington Futures Ltd v Delco Australia Pty Ltd [1986] HCA 82; (1986) 161 CLR 500 at [16]. If, after attempting to construe an exclusion clause (or indeed any other contractual term) in accord with its ordinary and natural meaning of the words, there is still ambiguity then (if the clause was imposed by one party upon the other without negotiation) the contra proferentem … Contra proferentem, meaning “against the offeror,” is a rule of contract law that requires any ambiguous clause to be interpreted with the meaning that is most in favor of the party that did not draft or request the clause. Where this is the case, UCTA states that an exclusion clause will only be valid to the extent that it was a fair and reasonable clause to have been inserted having regard to the circumstances which ought to have been known to the parties at the time of contracting. COMMENTAIRE . This is a matter of interpretation. The Alberta Court of Appeal, however, reversed this decision. The Common Law rule of construction "verba chartarum fortius accipiuntur contra proferentem" means that ambiguity in the wording of the policy is to be resolved against the party who prepared it. - The judge referred to recent case law limiting the effect of the contra proferentem rule, and held that the court’s task was “essentially the same” when interpreting exclusion or limitation clauses as for any other contractual provision. On When negotiating the contract, the parties expressly considered what would happen if Arup had been negligent when providing Persimmon with the services. However, some may argue that little has changed. If there is ambiguity or uncertainty as to the meaning of an exclusion clause the court will have to construe it contra proferentem that is to say it will judge it against the party who inserted it into the contract. Use of the contra proferentem rule to police the scope of an exclusion clause makes most sense in cases where one set of terms has been imposed wholesale by party A on a much weaker party B, and those terms include wide-ranging exclusions of A’s liability. Persimmon argued that “liability for” meant “liability for causing” pollution, contamination or asbestos and the Exclusion Clause should be interpreted narrowly, in accordance with the contra proferentem principle. If, after attempting to construe an exclusion clause (or indeed any other contractual term) in accord with its ordinary and natural meaning of the words, there is still ambiguity then (if the clause was imposed by one party upon the other without negotiation) the contra proferentem rule applies. In the context of exclusion clauses, this means the exclusion clause would be inapplicable - Houghton v Trafalgar Insurance Co. Ltd [1954] 1 QB 247. H&H contended that clause 45 of the works contract was an exclusion clause which should be interpreted “contra proferentem”, should be “read down” where it is inconsistent with the object and intent of the contract and does not apply in circumstances where there has been a fundamental breach of contract. However, the introduction of the Unfair Contracts Terms Act 1977 ("UCTA") has led to the defeat of exclusion clauses in many contracts through different means. The PDF server is offline. Contractors and consultants would no doubt reflect the degree of risk that they take on in the fees that they charge. meaning, read in the light of the contract as a whole, there b y giving weight to . Traductions en contexte de "ambiguitas contra proferentem" en anglais-français avec Reverso Context : So, it is clear that the courts consider that the literal and natural meaning of the words used in the clause is to be of primary importance in interpreting exclusion clauses. The judge at fist instance found in favour of Arup, noting the “increasing recognition that parties to commercial contracts are and should be left free to apportion and allocate risks and obligations as they see fit, particularly where insurance may be available to one or other or both parties to cover the risks being so allocated”(paragraph 25). We use cookies to improve your experience on our website. If a contract does incorporate an exclusion clause, the court must determine whether it covers the breach that has occurred. Liability for any claim in relation to asbestos is excluded.”. If an ambiguity exists in this Processing Agreement, or in a specific provision, neither the Agreement nor the provision shall be construed against the party who drafted the Agreement or provision. An exclusion clause is a term in a contract that seeks to restrict the rights of the parties to the contract. Asbestos was subsequently discovered on the site and Persimmon believed that Arup had been negligent by failing to identify and report the presence of asbestos at an early stage. Exclusion clauses are interpreted ‘contra proferentum’ The contra proferentum rule is that where a term of a contract is uncertain and ambiguous, the term is to be construed against the party attempting to rely on the clause. It appears that exclusion clauses are not in a privileged interpretive bubble. This is because the party which seeks to rely on an exclusion clause bears the burden of proving it. With a network spanning Asia, Australia, Europe, the Middle East and North America, we offer global reach and insight combined with the knowledge and understanding of local markets. This guide is for general information and interest only and should not be relied upon as providing specific legal advice. An exclusion clause in a contract is a clause that reduces or excludes a party’s liability for conduct that would otherwise amount to a breach of contract. The decision represents the latest in a recent chain of judgments from the Court of Appeal and the Supreme Court (see Impact Fuding v AIG Europe Insurance Ltd [2016] UKSC 57) regarding the correct interpretation of limitation and exclusion clauses in commercial contracts negotiated between parties of equal bargaining strength. each provision will be interpreted without disadvantage to the party who (or whose representative) drafted or proffered that provision. In the recent case of Persimmon Homes v Ove Arup [2017], the Court of Appeal has declined to apply the contra proferentem rule to an exclusion clause in a major commercial contract. What Is an Exclusion Clause Contract Law? Following the discovery of asbestos on the site, the Developers sought damages from Arup for negligence based on Arup’s failure to identify and report the presence of asbestos on the site. - It was nonsensical to suggest that the clause was aimed at the possibility that Arup might cause contamination during their investigations of the site. An exclusion clause is a term in a contract that seeks to restrict the rights of the parties to the contract. If the wording used supports more than one meaning, the relative “commerciality” of the possible interpretations of the clause and/or the extent to which they uphold the purpose of the clause should be considered. In the USA, disclaimer as well as limitation clauses in commercial contracts are subject to restrictions in the shape of Contra Proferentem16. This article was written by Paul Herbert, Partner, Corporate, with assistance from Georgie Sharpley, Trainee Solicitor. It has confirmed a limited role for the contra proferentem rule and Canada Steamship, in favour of respecting the parties’ freedom to allocate risk as they see fit. Traditionally, the district courts have sought to limit the operation of exclusion clauses. Contra Proferentem. Hotel denied liability, because of exclusion clause detailed on a sign on the. It is essential that these clauses are drafted with clarity. The logic behind this rule is that a party who imposes terms on another should make those terms clear and should be the one to suffer the consequences if they do not. It will only be in circumstances where the wording is truly ambiguous, that the courts will be prepared to consider the application of the contra proferentem principle. Exclusion clauses have frequently been found not to exclude liability for negligence where it was not expressly mentioned. Exclusion clauses were a common contractual tool in major construction contracts for allocating risks, and there was no need for the courts to approach these with a mindset determined to restrict their application. By continuing to use our website, we understand that you are happy for us to do this. The contra proferentem rule had a very limited role with regard to commercial contracts negotiated between parties of equal bargaining strength. This means that where there is any ambiguity in the wording of the clause, the courts will interpret the clause against the party seeking to rely on it. The recent case of Persimmon Homes Ltd and others v Ove Arup & Partners Ltd and another [2017] EWCAhas clarified the courts’ approach to exclusion clauses in commercial contracts to which UCTA does not apply. Ambiguously in a privileged interpretive bubble the judge found that the exemption excluded! 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