Outer House gives buyer chance to establish concealment after ruling warranty claim out of time

About this case:

• Citation:
  [2026] CSOH 101
• Judgment:
  External link
• Court:
  Court of Session Outer House
• Judge:
  Lord Lake

Lord Lake ruled that an 18-month contractual time bar was not permanently disapplied merely because fraud or wilful concealment was alleged. Instead, time during which a claim was delayed by such conduct did not count against the purchaser. He also held that fraud or concealment by any one seller would remove the contractual protection for all sellers in relation to the affected claim.

Jigsaw Bidco Ltd acquired all of the shares in Global Energy (Engineering and Construction) Limited from four sellers in February 2023. The share purchase agreement contained a series of warranties which the sellers warranted were true and accurate at completion. Jigsaw now alleges that some of those warranties were untrue and seeks damages for breach of contract.

McBrearty KC and Manson, instructed by Morton Fraser MacRoberts LLP, appeared for the pursuer. Thompson KC and Massaro, instructed by Brodies LLP, appeared for the first and third defenders; Ower KC and McWhirter, instructed by Shepherd & Wedderburn LLP, for the second defender; and the Dean of Faculty KC and Tosh, instructed by Stronachs LLP, for the fourth defender.

Eighteen-month time bar

Clause 8.7 of the agreement provided that the sellers would not be liable for a warranty claim unless written notice containing reasonable details of its nature and, as far as reasonably practicable, its amount was given within 18 months of completion.

Completion took place on 8 February 2023, making 8 August 2024 the contractual deadline. Jigsaw did not aver that notice had been given before that date, or subsequently.
It relied instead on clause 8.14, which provided that nothing in clause 8 would exclude or limit the liability of the sellers to the extent that a claim arose or was delayed as a result of fraud or wilful concealment by any seller, agent or adviser.

Jigsaw contended that the effect of fraud or wilful concealment was to disapply the 18-month limit altogether. The defenders argued that the clause merely stopped time running for so long as the fraud or concealment delayed the claim.

Lord Lake considered that the purpose of the warranties and limitation provisions had to be understood together. Warranties addressed the information imbalance between sellers who knew the company and a purchaser taking control for the first time. The time bar served the counterbalancing purpose of allowing sellers to bring their exposure to claims to an end after an agreed period.

Time lost through concealment

The judge rejected Jigsaw’s submission that the defenders’ construction produced an arbitrary or commercially absurd result. Where a seller had deliberately concealed a matter, it was natural that the seller should not be able to rely on the buyer’s failure to discover it during the period of concealment. But that did not mean the parties intended the contractual time limit to disappear altogether.

Lord Lake said that, on the defenders’ interpretation, the purchaser was simply “given back time lost as a result of the fraud or wilful concealment”. He added that clause 8.7 did not require court proceedings to be commenced within the 18 months. It required only notification of a claim, giving reasonable details and, where reasonably practicable, the amount claimed. Lord Lake said the requirement was not onerous: “A letter would suffice.”

The court therefore rejected the argument that a purchaser discovering a claim late would be placed in an impossible position. The purpose of the clause was for claims to be notified promptly, while the purchaser would still have the balance of the statutory prescriptive period in which to raise proceedings.

Effect on other sellers

A separate issue concerned whether fraud or wilful concealment by one seller removed the contractual protection only from that seller or from all of them.
Lord Lake held that it applied to all sellers.

Clause 8.14 referred to the liability of the “Sellers” where the relevant conduct had been committed “by any of the Sellers”. The wording therefore contemplated conduct by one seller while removing the protection afforded by clause 8 from the sellers collectively.

The judge also considered that interpretation consistent with the purpose of the provision. Fraud or concealment by one seller could prevent the purchaser discovering a claim against other sellers as well. He said it would be wrong to approach the clause as if its purpose were to punish an individual seller for wrongdoing. Rather, it existed to prevent the time bar from operating unfairly where the purchaser had been kept unaware of a claim.

Lord Lake concluded that “if there is fraud or concealment, the time limits in Clause 8.7 cease to apply in relation to that claim in respect of any of the defenders”.  
Claim out of time on existing pleadings

On the second issue, however, Lord Lake preferred the defenders’ construction. He considered that the words “to the extent that” in clause 8.14 linked the exclusion from the limitation provisions to the extent to which the claim had arisen or been delayed by fraud or concealment.

The contractual objective was therefore to ensure that a purchaser did not lose a claim merely because its existence had been hidden. There was no reason to remove the time bar entirely rather than adjust it to reflect the period of concealment.

On that interpretation, Jigsaw’s existing averments were irrelevant because the claim had not been intimated within the applicable period.

The company averred that it became aware of the need to consider making a claim on 12 August 2024, four days after the ordinary contractual deadline, and did not raise proceedings until 3 February 2026.

Preserved computer data

Jigsaw nevertheless asked the court not to dismiss the action immediately. Before the summons was called, it had obtained an order under section 1 of the Administration of Justice (Scotland) Act 1972 appointing commissioners to preserve various forms of computer data. The commissions had been executed, but the preserved material had not yet been interrogated for particular entries.

Jigsaw sought an opportunity to examine the data in an attempt to establish that at least one seller had known of, but concealed, the facts giving rise to the warranty claim. Lord Lake accepted that the circumstances were unusual because the matters alleged were “of their nature, clandestine”.

Although a party would ordinarily be expected to have pled its best case by the time of debate, the judge considered that Jigsaw should be given an opportunity to determine whether the preserved material could establish the necessary knowledge.

He noted that, given the dates involved, Jigsaw would have to establish knowledge on the part of a defender for almost all of the 18-month period following completion if the contractual time bar was not to operate.

The case was therefore put out by order to consider any motion by Jigsaw for review of the materials preserved during the commissions.