Through the Looking Glass: make sure your liability clause means what you want it to mean

"When I use a word," Humpty Dumpty said in a rather scornful tone, "it means just what I choose it to mean, neither more nor less" (Lewis Carroll, Alice, Through the Looking Glass).

Sadly, Humpty Dumpty's rule does not apply to the interpretation of exclusion clauses under English law. Well, not in such simple terms at least!  A particular case is a good reminder of why it is important to draft these clauses carefully.

The claimants in the case, Markerstudy Insurance and others, engaged Endsleigh Insurance Services to provide claims handling services to the claimants under a number of agreements. Markerstudy alleged a whole raft of breaches over a period of time and the court was asked to determine the meaning of parts of the liability clauses in the various agreements. The losses claimed by Markerstudy were mainly economic and related to the incorrect valuation of vehicles and the poor handling of claims by Endsleigh.

Wragge & Co's commercial experts have prepared an analysis on this case, which highlights the dangers of a formulaic approach to liability clauses, a trap we can all fall into very easily.