Termination & its consequences. Chris Nillesen reports
Probably the single most important legal concept an in-house lawyer needs to understand is contractual termination and the consequences of termination.
In the recent case of Fujitsu Services Ltd v IBM United Kingdom Ltd [2014] EWHC 752 (TCC), [2014] All ER (D) 223 (Mar) the court was asked to interpret the meaning of an exclusion clause which sought to limit the parties exposure on termination of the contract. The exclusion related to loss of profits. While the claimant sought to recover its expected loss of future income (ie profits) the respondent sought to rely on the exclusion to include the expected profits under the contract in question. It was held the exclusion of lost profits as a category of loss was “clear and unambiguous”. As a result it is important that the party expecting to make a profit under the contract ensures that this profit is not captured by an exclusion and is expressly carved out from the exclusion of liability. In some respects this is similar to the carve out from the obligation to pay invoices for
