In a significant ruling for commercial contract law, the Court of Appeal’s decision in EE Ltd v Virgin Mobile Telecoms Ltd [2025] EWCA Civ 70 has clarified how limitation of liability clauses – particularly those excluding claims for “anticipated profits” – should be interpreted. This case is a timely reminder for businesses and legal teams to scrutinise the wording of their contracts with care.

The Background

EE and Virgin Mobile entered into a telecommunications supply agreement (TSA), under which Virgin agreed to use EE’s mobile network exclusively for 2G, 3G, and 4G services. However, the TSA did not cover 5G.

In 2016 the TSA was amended to allow Virgin to provide its customers with 5G services from alternate suppliers.

Virgin subsequently partnered with Vodafone to provide 5G services and began migrating customers over, including non-5G customers.

EE claimed circa £25 million in damages, stating that it had been deprived of revenue that it would otherwise have earned.

EE’s position:

• EE claimed that Virgin’s actions breached the exclusivity clause
• EE sought damages for the diminution in the price payable under the TSA
• It did not agree with the High Court’s opinion that this was a claim for loss of profits.

Virgin’s position:

• Virgin denied that it was in breach of the exclusivity clause
• Virgin stated that even if it was in breach (which it denied), it’s liability for such loss was excluded by a limitation of liability clause in the TSA, which excluded both parties’ liability in respect of: (a) anticipated profits; or (b) anticipated savings.”

The High Court agreed with Virgin and granted summary judgment. EE appealed.

The Court of Appeal’s Decision

The Court of Appeal upheld the High Court’s decision.

The key issue was whether the phrase “anticipated profits” excluded EE’s claim for loss of profits due to Virgin’s alleged breach.

EE argued that:

• “anticipated profits” did not apply to its claim, which it referred to as ‘charges unlawfully avoided’.
• In any event, the limitation of liability clause should be interpreted narrowly as a broader reading would effectively strip the contract of meaningful remedies for breach.

However, the majority of judges (2:1) disagreed with EE. Zacaroli LJ, giving the leading judgment, held that:

• The clause in question was clear and unambiguous.
• “Anticipated profits” included lost profits and therefore covered profits expected under the contract.
• There was no legal principle requiring a narrow interpretation of such clauses as EE still had remedies available to it (including seeking injunctive relief, had EE sought this at the relevant time).
• The contract was negotiated with legal advice on both sides.
• The allocation of risk was commercially reasonable with the clause being mutually beneficial (ie. the clause was reciprocal and limited each party’s liability to the other).

The question regarding Virgin’s alleged breach of exclusivity was not addressed.

Key Takeaways for Contract Drafters

This case offers several important lessons for those involved in drafting and negotiating commercial contracts:

1. Clarity is Crucial

The court placed significant weight on the clarity of the wording. If a clause says “anticipated profits,” it will likely be taken at face value, unless there’s strong evidence to the contrary.

2. Broad Exclusions Can Have Broad Consequences

The clause in question effectively barred EE from recovering what it saw as a core loss from Virgin’s alleged breach. Businesses should consider whether such exclusions align with their commercial objectives and risk appetite.

3. Context Matters, But Won’t Override Clear Wording

Even though EE argued that the clause left them without a meaningful remedy, the court disagreed (injunctive relief would have been available at the relevant time, had EE sought it) and found that the commercial context didn’t justify departing from the plain language.

4. Negotiate Carve-Outs Where Needed

If certain types of losses are critical, they should be expressly carved out from any exclusion clauses. In this instance, whilst the TSA did include some carve-outs, damage caused to EE arising as a result of a breach of exclusivity was not one of them.

5. Legal Advice is No Shield

The fact that both parties had legal representation during contract negotiations made the court less sympathetic to arguments about unfairness or unintended consequences.

Final Thoughts

The EE v Virgin Mobile decision underscores the importance of precision in contract drafting. Limitation and exclusion clauses are not boiler plate clauses. They are powerful tools that must be used thoughtfully and with clear understanding. Businesses should ensure that these clauses reflect their commercial intentions and are tailored to the specific risks of the deal.

If you’re reviewing or negotiating a commercial contract, especially one involving complex liability provisions, our team is here to help. Get in touch at info@bailoransolicitors.com or 0113 266 0735 to to ensure your agreements are robust, clear, and enforceable.

This article does not constitute legal advice.