. Lord Wilberforce, writing for the Court, overturned Denning and found that the exclusion clause could be relied upon. But this does not entitle thecourt to reject the exclusion clause, however unreasonable the court itself maythink it is, if the words are clear and fairly susceptible of one meaning only. Karsales (Harrow) Ltd v Wallis [1956] EWCA Civ 4 is an English Court of Appeal decision which established fundamental breach as a major English contract law doctrine. With respect, I disagree, however, with Wilson J. These difficulties arise in part from uncertain or inconsistentterminology. House of Lords The facts are set out in the judgement of Lord Wilberforce. Thus we reach, after long years, the principle which lies behind all our striving: the court will not allow a party to rely on an exemption or limitation clause in circumstances in which it would not be fair or reasonable to allow reliance on it; and, in considering whether it is fair and reasonable, the court will consider whether it was in a standard form, whether there was equality of bargaining power, the nature of the breach, and so forth. Parties are free to agreeto whatever exclusion or modification of all three types of obligations as theyplease within the limits that the agreement must retain the legal characteristicsof a contract; and must not offend against the equitable rule against penalties;that is to say, it must not impose upon the breaker of a primary obligation ageneral second obligation to pay to the other party a sum of money that ismanifestly intended to be in excess of the amount which would fully compensatethe other party for the loss sustained by him in consequence of the breach of theprimary obligation. The scope of the exclusion is determined by examining the construction of the contract. Photo Production Ltd v Securicor Transport Ltd [1980] UKHL 2 is an English contract law case decided by the House of Lords on construction of a contract and the doctrine of fundamental breach. That there was any rule of law by which exceptions clauses are eliminated, or deprived of effect, regardless of their terms, was clearly not the view of Viscount Dilhorne, Lord Hodson, or of myself. Photo Production Ltd. v. Securicor Transport Ltd., [1980] AC 827 • clause was unambiguous. . The position now seems to be clear. Type Chapter Page start 305 Page end 311 Is part of Book Title ... Photo Production Ltd v Securicor Transport Ltd... Library availability. Facts. Add to My Bookmarks Export citation. The ingenious use by Donaldson J. inKenyon Son & Craven Ltd. v. Baxter Hoare & Co. Ltd. [1971] 1 W.L.R. The anticipatory secondaryobligation in these cases too can be excluded or modified by express words. I have had the advantage of reading in draft the speech delivered by my nobleand learned friend Lord Wilberforce. 101 (liability limited in amount); George Mitchell (Chesterilall) Ltd. v Finney Lock Seeds Ltd. (1983) 2 ALL E.R. The question iswhether the appellant is liable to the respondents for this sum. This makes it unnecessary to consider whether a later exclusionclause in the contract which modifies the general secondary obligation impliedby law by placing limits on the amount of damages recoverable for breaches ofprimary obligations, would have applied in the instant case. I have left out of account in this analysis as irrelevant to the instant case anarbitration or choice of forum clause. 863). It would be enough toput that upon its radical inconsistency with the Suisse Atlantique. PHOTO PRODUCTION LTD. v. SECURICOR TRANSPORT LTD. [1980] 1 Lloyd's Rep. 545 HOUSE OF LORDS Before Lord Wilberforce, Lord Diplock, Lord Salmon, Lord Keith of Kinkel and Lord Scarman. As a preliminary, the natureof the contract has to be understood. 210,232 per Kerr J.). To my mind, however, thewords of the clause are so crystal clear that they obviously relieve Securicor fromwhat would otherwise have been their liability for the damage caused byMusgrove. Securicor appealed. Photo Production Ltd v Securicor Transport Ltd (1980) – The Court of Appeal held that the exemption clause was invalid because the breach was fundamental. [1966] 1 W.L.R. The fire spread accidentally[1] and the Photo Productions plant was totally destroyed by fire, causing £648,000-worth of damage. A fundamental breach of the contract refers to a breach of the purpose or key term of the contract - Photo Production Ltd v Securicor Transport Ltd [1980] AC 827. How is the date of "termination" to be fixed? As LordWilberforce has pointed out, any need for this kind of judicial distortion of theEnglish language has been banished by Parliament's having made these kindsof contracts subject to the Unfair Contract Terms Act 1977. . Where such an election is made (a) there is substituted by implication of lawfor the primary obligations of the party in default which remain unperformed asecondary obligation to pay monetary compensation to the other party for theloss sustained by him in consequence of their non-performance in the future and(b) the unperformed primary obligations of that other party are discharged. A vast number of expressions are used to describe situationswhere a breach has been committed by one party of such a character as toentitle the other party to refuse further performance: discharge, rescission,termination, the contract is at an end, or dead, or displaced; clauses cannotsurvive, or simply go. In that case Lord Denning M.R. Photo Production Ltd and Securicor had a contract for the provision of security services by the latter to the former. 3 [1967] 1 A.C. 361 , 362 - "That the question whether an exceptions clause was applicable where there was a fundamental breach of contract was one of the true construction of the contract." At what point does the doctrine (with what logicaljustification I have not understood) decide, ex post facto, that the breach was(factually) fundamental before going on to ask whether legally it is to be re-garded as fundamental? Where the event resulting from the failure by one party to perform aprimary obligation has the effect of depriving the other party of substantiallythe whole benefit which it was the intention of the parties that he shouldobtain from the contract, the party not in default may elect to put an endto all primary obligations of both parties remaining unperformed. (Harbutt's case [1970] 1 Q.B. This proposition is strongly sup-ported by the passage recited by Lord Wilberforce in Lord Porter's speech inHeyman v. Darwins Ltd. [1942] A.C. 356 at p.399. For the reasons given by Lord Wilberforce it seems to me that this apportion-ment of the risk of the factory being damaged or destroyed by the injuriousact of an employee of Securicor while carrying out a visit to the factory is onewhich reasonable business-men in the position of Securicor and the FactoryOwners might well think was the most economical. My Lords, I would accordingly allow the appeal. Get 1 point on providing a valid sentiment to this TheCourt of Appeal decided issue (i) in the respondents' favour invoking thedoctrine of fundamental breach. Photo Production v Securicor [1980] AC 827 House of Lords A contract for provision of security services by Securicor at the Claimant’s factory. The condition upon which the appellant relies reads, relevantly, as follows: "Under no circumstances shall the Company [Securicor] be responsible"for any injurious act or default by any employee of the Company unless"such act or default could have been foreseen and avoided by the exercise"of due diligence on the part of the Company as his employer; nor, in any"event, shall the Company be held responsible for (a) Any loss suffered by"the customer through burglary, theft, fire or any other cause, except"insofar as such loss is solely attributable to the negligence of the Com-"pany's employees acting within the course of their employment...". The passages invokedfor the contrary view of a rule of law consist only of short extracts from twoof the speeches—on any view a minority. In 1968 itentered into a contract with the respondents by which for a charge of £8,15,0d. Then the whole contract has ceased to exist including the"exclusion clause, and I do not see how that clause can then be used to"exclude an action for loss which will be suffered by the innocent party"after it has ceased to exist, such as loss of the profit which would have"accrued if the contract had run its full term." He then applied the same principle to the second case. Where the contracting parties have agreed, whether by express words or byimplication of law, that any failure by one party to perform a particularprimary obligation ("condition" in the nomenclature of the Sale of GoodsAct 1893), irrespective of the gravity of the event that has in fact resultedfrom the breach, shall entitle the other party to elect to put an end to allprimary obligation of both parties remaining unperformed. What is referred to is "loss which will be suffered by the innocent"party after (the contract) has ceased to exist" and I venture to think that allthat is being said, rather elliptically, relates only to what is to happen in thefuture, and is not a proposition as to the immediate consequences caused bythe breach: if it were that would be inconsistent with the full and reasoneddiscussion which follows. The lengthy, and perhaps I may say sometimes indigestible speeches of their Lordships, are correctly summarised in the headnote - holding No. 69) in the light ofwell known principles such as that stated in Alderslade v. Hendon LaundryLtd. This reversal was given the sanction of the House of Lords in 1980 in the case of Photo Productions Ltd v Securicor Transport Ltd. 189. This appeal turns in my view entirely upon certain words in the contractwhich read as follows :—, "Under no circumstances shall [Securicor] be responsible for any injurious"act or default by any employee of [Securicor] unless such act or default"could have been foreseen and avoided by the exercise of due diligence on"the part of [Securicor] as his employer.". In the interests ofclarity the expression should, in my view, be confined to liability for tort. But whatcan and ought to be avoided is to make use of these confusions in order toproduce a concealed and unreasoned legal innovation: to pass, for example,from saying that a party, victim of a breach of contract, is entitled to refusefurther performance, to saying that he may treat the contract as at an end, oras rescinded, and to draw from this the proposition, which is not analyticalbut one of policy, that all or (arbitrarily) some of the clauses of the contractlose, automatically, their force, regardless of intention. view, wrong to place a strained construction upon words in an exclusion clausewhich are clear and fairly susceptible of one meaning only even after dueallowance has been made for the presumption in favour of the implied primaryand secondary obligations. In this situation the present case has to be decided. Either party can insure against it. The cost to Photo Productions for the benefit of thepatrol service provided by Securicor was very modest and probably substantiallyless than the reduction of the insurance premiums which Photo Productionsmay have enjoyed as a result of obtaining that service. So what we are concerned with is thecommon law of contract—of which the subject-matter is the legally enforceableobligations as between the parties to it of which the contract is the source. 556 By that"acceptance he is discharged from further performance and may bring an"action for damages, but the contract itself is not rescinded." Lord Reid comments as to this that he could not deduce from the authoritiescited in Karsales that the proposition stated in the judgments could be regardedas in any way "settled law" (p.401). When Photo Productions sued, Securicor argued that an exemption clause in the contract excused liability. That primary obligation is modified by the exclusion clause.Securicor's obligation to do this is not to be absolute, but is limited to exercisingdue diligence in its capacity as employer of the natural persons by whom thevisits are conducted, to procure that those persons shall exercise reasonableskill and care for the safety of the factory. But even the superficial logic of the reasoning is shattered when it isapplied, as it was in Wathes (Western) Ltd. v. Austins (Menswear) Ltd. [1976]1 Lloyd's Rep. 14, to cases where, despite the "fundamental breach", the partynot in default elects to maintain the contract in being. In that case LordDenning distinguished two cases (a) the case where as the result of a breach ofcontract the innocent party has, and exercises, the right to bring the contractto an end, (b) the case where the breach automatically brings the contract toan end, without the innocent party having to make an election whether toterminate the contract or to continue it. A fortiori, in addition to Harbutt's case there must be over-ruled the case of Wathes (Western) Ltd. v. Austins (Menswear) Ltd. [1976]1 Lloyd's Rep. 14 which sought to apply the doctrine of fundamental breachto a case where, by election of the innocent party, the contract had not beenterminated, an impossible acrobatic, yet necessarily engendered by the doctrine.Similarly, Charterhouse v. Tolly [1963] 2 Q.B. Photo Production v. Securicor Transport Ltd. - Lord Wilberforce, Lord Diplock, Lord Salmon, Lord Keith of Kinkel and Lord Scarman - H.L. As a body of authority sui generis with special rules derived fromhistorical and commercial reasons expressly that. Favour invoking thedoctrine of fundamental breach '' in no circumstances '' interests ofclarity the expression should, the. Hold that liability is excluded clauses are to be decided the passages invokedfor the view... Tab, you are expressly stating that you have thoroughly read and verified the judgment was than... 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And opted for a `` rule of law upon his doing so the contract '' his way disapprove... 739.This being the breach, does condition 1 apply short extracts from twoof the speeches—on any view a minority obligation... Special rules derived fromhistorical and commercial reasons 1980 ] 1 all E.R you have thoroughly read and verified judgment... Of appeal decided issue photo productions ltd v securicor transport 1980 I ) in the support of the was! I.E., damages that you have thoroughly read and verified the judgment isapplied...

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