Last week, IP Draughts provided some in-house training on the drafting of clinical trial agreements for a London-based academic institution. Thanks to all concerned for making it a very interesting and enjoyable day.
Preparing for the talk, IP Draughts looked in some detail at the wording of the standard UK National Health Service (NHS) clinical trials agreements (CTAs). These agreements have been negotiated between representatives of the Department of Health, the NHS, industry and, in some cases, academic institutions. The agreements are mostly accepted by all concerned as standard agreements that must be used in clinical trials involving NHS hospitals.
Several versions of a template agreement have been produced, including one for pharmaceutical drugs, one for medical devices, and one for academic trials. There are also variants of these agreements that can be used where a clinical research organisation (CRO) is providing support services, and minor variants between the versions used in different parts of the United Kingdom. Copies of the agreements can be downloaded from a Government website here.
Clause 5.3 of the version used for pharmaceutical drugs includes the following wording:
In no circumstances shall either Party be liable… for any loss of profit, business, reputation, contracts, revenues or anticipated savings for any special, indirect or consequential damages of any nature, which arises directly or indirectly from any default on the part of any other Party.
There are several problems with this wording, including the mystifying reference to “any other Party” in the last line. But what really caught IP Draughts’ eye was the word “for” in the second line of the quoted extract above (it is in the fourth line of the text of clause 5.3 in the template agreement which IP Draughts downloaded from the NHS website).
Surely, thought IP Draughts, that “for” should be an “or”? The same clause appears, with minor variations, in the other template NHS CTAs. Clause 5.8 of the version for collaborative research also says “for”, while clause 5.3 of the version for medical devices says “or”. Ah-hah, thought IP Draughts. Clearly it is a typo and it has been corrected by the drafter in at least one of the templates.
It seems to IP Draughts that this typo could radically change the interpretation of the clause. The “correct” version, using the word “or”, seeks to exclude liability in two, alternative situations that can be summarised as: (1) financial losses; (2) indirect losses. This is a familiar approach to drafting these clauses: if the clause had only referred to indirect losses, it would have failed to exclude financial losses that are within the category of direct losses.
By saying “for” rather than “or”, the distinction between financial losses and indirect losses is muddied. It is not now clear what the clause means, but it could be interpreted as covering only financial losses that are within the category of indirect losses.