Companies involved in leasing transactions – whether they are lessors, suppliers or service providers – usually attempt to exclude their liability for loss of profits.

Frequently, the relevant exclusion clause is widely drafted, but often appears together with an exclusion for special or consequential losses.

English courts have previously held that, unless expressly excluded, loss of direct (or ordinary) profits will in fact still be recoverable following a breach because, as with other foreseeable losses, a loss of profits arising in the ordinary course of business would arise naturally from a breach or would otherwise be contemplated or agreed by the parties when they entered into the contract.

The recent case of Proton Energy Group SA v Orlen Lietuva involved a dispute between Proton, a company involved in international trading of oil and gas products, and Orlen, a petroleum refining company, in respect of a cargo of crude oil.

The case dealt at length with the issues of whether or not a contract was concluded between the parties and the nature of any breach. However, the court also considered the terms of the exclusion clause between the parties.

The standard terms between the parties provided that "in no event shall [Proton] have any liability for any … loss of profit … or any type of special indirect or consequential loss." Which would seem, on its face, to be a fairly robust exclusion of liability under this particular head of loss.

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Orlen argued that clause 23 should be read as a whole and in fact only excluded liability for loss of profit where it was a "special indirect or consequential loss", not where it was the ordinary and entirely foreseeable consequence of a breach.

What was important about this case was that the court went even further and found that the parties could never have contemplated that Proton would be entitled to absolve itself from all liability for loss of all types of profit, because this simply made no sense given the facts.

This suggests that Proton could not have won this argument, no matter how they worded the exclusion clause.

The key lesson from this case is that exclusion clauses should not be regarded merely as "boilerplate" and ignored.

Where a specific loss needs to be excluded, it should be clearly and unambiguously defined: the parties may even consider specifically including those losses they have agreed to cover, rather than attempting the reverse.

However, as the above case shows, there is always the risk that where the court believes a party is acting unreasonably, it may attempt to find a way around such a clause.

Sam Yardley is a partner in the asset finance group at Watson, Farley &Williams