The terms negligence and gross negligence often appear in contracts. The tort of gross negligence is not recognised by English Law as a concept distinct from negligence. It is generally used in contracts when parties limit their liability to each other. A few examples are listed below:
- a right to terminate right may arise in the event of gross negligence;
- a professional consultant may exclude liability save for instances of gross negligence;
- consequential loss may be excluded except where the loss is caused by gross negligence
There is usually no definition for the term “Gross Negligence” even though there can be serious financial consequences from its reliance. It is left up to the court to interpret it.
The courts have been reluctant to provide any strong guidance on what will constitute gross negligence, other than noting it as differing from negligence as a matter of degree. In the case of Camerate Property Inc v Credit Suisse Securities (Europre) Ltd Andrew Smith J re-visited the meaning of gross negligence. He concluded that although the distinction between negligence and gross negligence is on a degree, gross negligence is clearly intended to be something more fundamental than failure to exercise proper skill and/or care constituting mere negligence.
When negotiating a construction contract it is best to try and avoid using the term gross negligence unless it is clearly defined, otherwise, in the event of a dispute it will be up to the courts to interpret the works used according to their natural meaning in the context of the contract.
To download the full newsletter as a PDF, please click here.
These notes have been prepared for the purpose of an article only. They should not be regarded as a substitute for taking legal advice. “Cutting through the legalese” in particular is intended to be a short and introductory feature which does not provide comprehensive guidance on the topic in question. Legal advice should always be sought.