Cases - Bovis Construction (Scotland) Ltd v Whatlings Construction Ltd (1995) HL

Record details

Name
Bovis Construction (Scotland) Ltd v Whatlings Construction Ltd (1995) HL
Date
(1995)
Citation
SLT 1339
Keywords
Sub-contractor - repudiatory breach - contract amendment - limitation of liability - exclusion and limitation clauses - ambiguity
Summary

Bovis Construction employed Whatlings Construction as subcontractors for the construction of part of a concert hall. The contract was constituted by an exchange of letters which incorporated certain correspondence in which it was agreed that Whatlings' liability 'in respect of time-related costs' should be limited to £100,000. The contract was terminated on the grounds of Whatlings' alleged failure to proceed diligently with the work and Bovis sought damages of £1,041,000. Whatlings contended that the damages were limited to £100,000.

The House of Lords held that the limitation did not extend to cover damages flowing from a repudiatory breach on the part of Whatlings leading to termination and hence non-performance of the subcontract. Limitation clauses were to be construed strictly and the agreed limitation was concerned only with Whatlings' failure to complete the works on time. Accordingly Bovis' claim was allowed.

The point is that while Whatlings presumably intended the limitation to apply to all their liability, their Lordships construed the wording strictly against it. Exclusions and limitations of liability and indemnity clauses are always construed strictly, but this decision may also be seen as an example of the application of the contra preferentum rule, meaning if there is an ambiguity in a document, the wording is construed against the party who drafted it.