Does a limitation clause apply to a claim in debt? A recent English decision

A recent case turned on the question of whether a limitation clause limited liability just for damages or also for debt.

The clause read:

“the total liability of either party shall in respect of all acts, omissions, events and occurrences whether arising out of any tortious act, breach of contract or statutory duty or otherwise arising in any particular Contract Year in no circumstances exceed a sum equal [to zero on the facts]”.

The judgment is here: Costcutter Supermarkets Group Limited v Ameet Kumar Vaish & Anor [2024] EWHC 152 (KB).

The court held, despite the seemingly wide wording of the clause, that the clause was limited to claims for damages, or for losses arising from breach of a secondary obligation, while a claim in debt is for breach of a primary obligation and very different wording would be required to exclude (or limit) liability for debt.

The case is a reminder of the distinction between claims in debt and claims for damages. Debt claims require no proof of loss, give rise to no duty to mitigate, and the law on penalties is inapplicable.

The case is also a reminder to carefully draft limitation clauses.

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The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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