Contract

Agreement for general release of all claims - claim not contemplated by parties - not covered by agreementBank of Credit and Commerce International SA v Ali and others: HL (Lord Bingham of Cornhill, Lord Browne-Wilkinson, Lord Nicholls of Birkenhead, Lord Hoffmann and Lord Clyde): 1 March 2001The defendant employees were being made redundant by the claimant bank.

In consideration of the sums being paid by the bank, they signed release agreements accepting their terms 'in full and final settlement of all or any claims ...

of whatsoever nature that exist or may exist' against the bank.

The following year the bank went into liquidation and it became clear that it had been conducting its business corruptly and dishonestly.

The liquidators brought actions against the defendants for the recovery of loans made to them, and they counterclaimed damages for misrepresentation and breach of their employment contracts, resulting in disadvantage on the labour market.

The liquidators contended that the release agreements precluded the claims, and the judge so held.

The Court of Appeal allowed an appeal by the defendants.

The bank appealed.Christopher Jeans QC and Daniel Stilitz, instructed by Lovells, for the bank.

Robin Allen QC, Isaac Jacob and Thomas Coghlin, instructed by Beale & Co, for the respondent employee.Held, dismissing the appeals (Lord Hoffmann dissenting), that a general release was to be construed in the same way as any other contract and the question was of the parties' intention objectively ascertained in the context; that neither party to the release agreements could realistically have supposed at the time when they had been entered into that a claim for 'stigma' damages was a possibility; and that, accordingly, they had not intended the agreements to apply to such claims.

(WLR)