The distinction between Negligence and Gross Negligence in English contract law has been an issue in many commercial contracts for over a century. In order to reduce the confusion surrounding such matters we have written a brief of the leading case law on the matter and the most recent definition of Gross Negligence provided by the courts. To read our guidance note on Gross Negligence in the English contract law, please read on.
There has been debate as to the distinction, which English contract law makes, between negligence and gross negligence. The courts have considered this issue on a number of occasions and although there is no general consensus as to a definition of gross negligence, and the matter is judged on a case-by-case basis, there are a number of cases that provide some guidance.
The case of Camatra Property Inc v Credit Suisse Securities (Europe) Ltd [2011] EWHC 479 (Comm) is considered one of leading authorities for gross negligence in England. Based on Camatra gross negligence should be interpreted as a standard requiring a party to act in a manner more negligent than ordinary negligence; the concept is capable of embracing “not only the conduct undertaken with actual appreciation of the risks involved, but also serious disregard of or indifference to an obvious risk”. The negligent party will need to have an appreciation of the risk of harm and some degree of fault or blame, which is more exceptional than that required for ordinary negligence.
Further guidance is provided on this matter by Baron Rolfe (later Lord Cranworth) in Wilson v Brett (1843). In his judgement, Baron Rolfe said that he “could see no difference between negligence and gross negligence; that it was the same thing, with the addition of a vituperative (abusive) epithet.”
However, despite the presence of case law on the matter, the concept of gross negligence in English contract law still remains largely undefined.
That being said, there have been recent developments in respect of credit agencies that may be informative in setting a general distinction between negligence and gross negligence in the UK. The Credit Rating Agencies (Civil Liability) Regulations 2013 (implementing Article 35a of Regulation (EC) No 1060/2009) defines gross negligence of a credit rating agency as the recklessness of its senior management, where senior management are reckless if they “act without caring whether an infringement occurs”.
As you can see, the debate is still unclear. As such, caution should still be exercised when including it in contracts to avoid uncertainty.
Should you require any further advice or information on the above, Cleveland & Co, your external in-house counsel, are here to help.
