Earlier this year, the Court of Appeal heard the case of EE Ltd v Virgin Mobile Telecoms Ltd [2025] EWCA Civ 70. The Court of Appeal was asked to determine the interpretation of an exclusion of liability clause included within the contract.
Exclusion of liability clauses are a useful tool to help manage risk within a contract. However, this case demonstrates the importance of making sure contractual terms are drafted in a clear and unambiguous way to avoid disputes later down the line!
Background
EE and Virgin entered into a contract whereby EE gave Virgin access to its network so that Virgin could provide its own customers mobile network services. The contract included exclusivity provisions.
A dispute arose when Virgin began migrating its customers away from the EE network. EE issued a claim against Virgin and sought damages in respect of lost revenue. Virgin defended the claim and sought to rely on a clause within the contract which stated ‘neither party shall have liability to the other in respect of anticipated profits’.
Virgin said EE’s claim was for “anticipated profits” whereas EE argued that it was actually seeking damages for “charges unlawfully avoided” (i.e. diminution in price).
The key question for the Court to determine therefore was whether EE’s damages claim for lost revenue fell within the scope of “anticipated profits”.
High Court decision
The first instance judge considered that the EE’s claim was for “anticipated profits”. They therefore found in favour of Virgin. EE appealed this decision.
Court of Appeal
The appeal was ultimately decided in Virgin’s favour because the majority judges took the view that EE’s claim for damages fell within the scope of the exclusion of liability clause.
In making their decision, the Judges specifically noted the following:-
- Anticipated profits was used interchangeably with loss of profits throughout the contract
- There were extensive contractual negotiations and therefore if EE and Virgin Mobile intended the exclusion to be limited to certain profits, the contract would have said so
Legal commentary
This case reiterates that a starting point for any contractual interpretation dispute is the ordinary meaning of the words used in the contract itself. As such, if you want to narrow the scope of an exclusion of liability clause, this should be done explicitly as possible.
We therefore recommend that when drafting a contract, clear and consistent terminology is used to avoid any unanticipated outcomes later down the line.
Laura Stanley and Richard Slater have significant experience in dealing with contractual disputes particularly cases arising from exclusion of liability clauses. If you have any queries or require advice in respect of the contents of this article, please contact them on 0345 450 5558 or enquiries@stephens-scown.co.uk