Exclusions from Immunity: Gross Negligence and Wilful Misconduct

James Pickavance and James Bowling

October 2017

A paper presented to the Society of Construction Law at a meeting in London on 5th September 2017

This paper analyses the terms 'gross negligence' and 'wilful misconduct' which continue to be used regularly as carve-outs from exclusion or limitation clauses in construction contracts.However, parties are reluctant, or unable, to define the terms in those contracts and they are left to the courts to grapple with.The paper examines the relevant authorities and the development of the treatment of both gross negligence and wilful misconduct, noting that the terms appear to apply a high bar to a successful attempt to disapply an exclusion clause.The paper assesses the specific problems likely to arise in practice, of causation, multiple breaches, delay, vicarious liability and termination.Concluding that the two terms are here to stay, the authors use the relevant authorities and apply business common sense to suggest working definitions of gross negligence and wilful misconduct which could be a starting-point for contracts or used as guidance and criteria to assess whether an action or inaction falls within the auspices of these terms.

Introduction - Exclusion from immunity: Gross negligence - Development of the case law - Gross negligence: Towards a working definition - Exclusion from immunity: Wilful misconduct or default - Development of the case law - Wilful misconduct: Towards a working definition - Particular problems and scenarios in practice - Causation - Multiple breaches - Delay - Vicarious liability and wilful misconduct - Termination and wilful misconduct - Conclusion.

The authors: James Pickavance is a partner with Eversheds Sutherland LLP, solicitors in London and James Bowling is a barrister practising at 4 Pump Court, London.

Text: 35 pages