Fact vs fiction: The liability of disclosed principals

February 23, 2021
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The Court of Appeal in Bell v Ivy Technology Ltd[1] recently dismissed Mr Bell’s appeal that a breach of warranty claim should not be brought against him under a share purchase agreement when he was not a party to it and in which the liability of third parties was excluded.


  • On 4 April 2019, Ivy Technology Ltd (Ivy) (as buyer) entered into a share purchase agreement (SPA) to acquire the shares in five online gambling companies (collectively, 21Bet).
  • The shares were legally owned by Richard Hogg and beneficially owned 50/50 by Mr Martin and Mr Bell.  Although Ivy was made aware of the ownership structure during the due diligence process prior to execution of the SPA, only Mr Martin entered into it as seller.
  • Both Ivy and Mr Martin received legal advice during negotiations of the SPA, with Mr Martin keeping Mr Bell up to date on the sale at a high level.  Mr Bell admitted that “as a 50% shareholder, [he] expected to receive [his] share of the balance of the sale proceeds”.
  • The SPA provided for a payment of £3 million by Ivy to Mr Martin upon completion, with additional consideration being payable depending on the business performance of 21Bet.  On 5 April 2019, Ivy made a pre-payment to Mr Martin of £2.95 million pending completion.
  • Soon after the SPA was entered into, Ivy discovered a large number of liabilities, which it claimed had been concealed from it during the course of negotiations.  Ivy brought a claim against Mr Martin for fraudulent misrepresentation, breach of warranty and in restitution for the return of the £2.95 million pre-payment.  Ivy later issued an application to amend the claim form and Particulars of Claim so that Mr Bell could be named as a second defendant in the matter, arguing that Mr Martin had entered the SPA as principal for his beneficial share, and as agent for Mr Bell’s beneficial share.
  • Mr Bell argued that the terms of the SPA included an express provision (clause 15.12) excluding third party, and therefore his, liability:

“Nothing in this Agreement, express or implied, is intended to confer upon any third parties other than the Parties hereto or their respective successors and assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.”

  • The Court at first instance granted Ivy permission to make the amendments, finding that “at trial there can reasonably be expected to be evidence explaining why the parties chose to contract with each other on terms which did not accord with the reality as known to the parties” and that Ivy had a real prospect of success with contending that Mr Bell was liable for breach of the SPA.
  • The Court of Appeal dismissed Mr Bell’s subsequent appeal that the exclusion clause prevented him from being liable under the SPA. 


Despite agreeing that Mr Bell had a “very cogent case” that clause 15.12 of the SPA excluded third party liability, Lord Justice Arnold stated that:

“… the clause does not in terms exclude liability arising by virtue of Mr Bell being the principal of a Party who has entered into the SPA as his agent.  Moreover, if that had been the intention, it would have been easy for the SPA to have said so.”

The judgement in Bell v Ivy Technology Ltd demonstrates that (particularly where their identity has been disclosed) if a principal seeks to limit or exclude their liability, a general third-party exclusion provision is unlikely to provide sufficient protection and, instead, the principal’s liability should be expressly stated as being excluded. 

[1] [1] [2020] EWCA Civ 1563 (19 November 2020)

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