These difficulties arise in part from uncertain or inconsistentterminology. Wilberforce explicitly rejected Denning's application of the doctrine of fundamental breach and opted for a "rule of construction" approach. 287, when commenting unfavourably on the thenbudding doctrine of fundamental breach in a portion of my judgment in theCourt of Appeal that did not subsequently incur the disapproval of this House. But even ifthe matter were res Integra I would find the decision to be based upon un-satisfactory reasoning as to the "termination" of the contract and the effect of"termination" on the plaintiffs' claim for damage. Photo Productions Ltd engaged Securicor to guard their premises at night. It had been in existence forsome two-and-a-half years when the breach that is the subject matter of theseproceedings occurred. The anticipatory secondaryobligation in these cases too can be excluded or modified by express words.  He said if the breach was fundamental then the exclusion clause would be invalid, following his decision in Harbutt's "Plasticine" Ltd v Wayne Tank and Pump Co Ltd. He said the following.. I entirely agree with my noble and learned friend Lord Wilberforce's analysisof the Suisse Atlantique case which explains why the breach does not bringthe contract to an end and why the so-called "rule of law" upon which PhotoProductions rely is therefore non-existent. . Finance Ltd. v. NationalMortgage Bank of Greece  1 Lloyd's Rep. 446 in which he had put forwardthe "rule of law" doctrine. The breach of duty com-mitted by Securicor lay in a failure to discharge this latter obligation. I have come to think that some of these difficulties canbe avoided; in particular the use of "rescission", even if distinguished fromrescission ab initio, as an equivalent for discharge, though justifiable in somecontexts (see. The respondents in factrelied upon them for an argument that since they exempted from negligencethey must be taken as not exempting from the consequence of deliberate acts.But this is a perversion of the rule that if a clause can cover something otherthan negligence, it will not be applied to negligence. 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  AC 827. 3  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." There must beimplied an obligation to use due care in selecting their patrolmen, to take careof the keys and, I would think, to operate the service with due and properregard to the safety and security of the premises. Facts. This reasoning can be extended without unduestrain to cases where the party entitled to elect to terminate the contract does notbecome aware of the breach until some time after it occurred; his election toterminate the contract could not implausibly be treated as exercisable nunc protunc. He is not allowed to use them as a cover"for misconduct or indifference or to enable him to turn a blind eye to his"obligations. This does not come into operation untila party to the contract claims that a primary obligation of the other party hasnot been performed; and its relationship to other obligations of which thecontract is the source was dealt with by this House in Heyman v. Darwins Ltd. A.C. 356. 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. The HOL later ruled that the clause protected Securicor from the fundamental breach. He then applied the same principle to the second case. Contains public sector information licensed under the Open Government Licence v3.0. The judge's finding was in these words:—. Accordingly I too would allow the appeal. DATE OF JUDGEMENT: 14 February 1980. For convenience I restate it: "If fundamental breach is established the next question is what effect,"if any, that has on the applicability of other terms of the contract. in this was following the earlier decision of the Court of Appeal, and in particular his own judgment in Harbutt's "Plasticine" Ltd v Wayne Tank & Pump Co Ltd  1 Q.B. I have had the advantage of reading in draft the speech delivered by my nobleand learned friend Lord Wilberforce. Whether, in addition tonegligence, it covers other, e.g., deliberate, acts, remains a matter of constructionrequiring, of course, clear words. In cases falling within the first exception, fundamental breach, the anticipatorysecondary obligation arises under contracts of all kinds by implication of thecommon law, except to the extent that it is excluded or modified by the express. We are not concerned with the Unfair Contract Terms Act 1977 since thepresent contract was entered into before that Act was passed. 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. Key Case Photo Production Ltd v Securicor Transport Ltd (1980) Facts: The plaintiffs owned a factory, and engaged the defendants to provide security services, which included a night patrol. Clauses which absolve a party to a contract from liability for breaking it areno doubt unpopular—particularly when they are unfair, which incidentally, inmy view, this clause is not. Since the obligations implied by law in acommercial contract are those which, by judicial consensus over the years or byParliament in passing a statute, have been regarded as obligations which areasonable businessman would realise that he was accepting when he enteredinto a contract of a particular kind, the court's view of the reasonableness of anydeparture from the implied obligations which would be involved in construingthe express words of an exclusion clause in one sense that they are capable ofbearing rather than another, is a relevant consideration in deciding what mean-ing the words were intended by the parties to bear. I am consciousthat I have myself sometimes been guilty of this when I look back on judgmentsI have given in such cases as Hong Kong Fir Shipping Co. Ltd. v. Kawakasi KisenKaisha Ltd.  2 QB 26; Ward v. Bignall  1 Q.B. Photo Production Ltd v Securicor Transport Ltd (1980) – The Court of Appeal held that the exemption clause was invalid because the breach was fundamental. There are further provisions limiting to stated amounts the liability of theappellant upon which it relies in the alternative if held not to be totally exempt. Photo Production Ltd v Securicor Transport Ltd  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. 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. Photo Production Ltd v Securicor Transport Ltd  AC 827. "accidentally": there were suspicions of arson, but insufficient evidence to prosecute. Photo Production Ltd v Securicor Transport Ltd | Online Assignment Help Read the case of Photo Production Ltd v Securicor Transport Ltd  AC 827 Identify Lord Wilberforce’s reasons for reversing the Court of Appeal’s decision and ruling for the defendants on those legal issues. In these circumstances nobody could consider itunreasonable, that as between these two equal parties the risk assumed bySecuricor should be a modest one, and that the respondents should carry thesubstantial risk of damage or destruction. Either party can insure against it. It is not necessary to review fully the numerous cases in which the doctrineof fundamental breech has been applied or discussed. View in catalogue Find other formats/editions. . Any persons capable of making a contract are free to enter into any contractthey may choose: and providing the contract is not illegal or voidable, it isbinding upon them. 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. It applies in the cases of the twoexceptions as well. Lord Denning MR held that the doctrine of fundamental breach did apply, and that Securicor was liable. 863). This appeal arises from the destruction by fire of the respondents' factoryinvolving loss and damage agreed to amount to £615,000. 3—"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". “In our jurisdiction however, such contracts are purely governed by common law. Photo Production Ltd v Securicor Transport Ltd  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. The cases linked on your profile facilitate Casemine's artificial intelligence engine in recommending you to potential clients who might be interested in availing your services for similar matters. 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. He then applied the same principle to the second case. Photo Production v. Securicor Transport Ltd. - Lord Wilberforce, Lord Diplock, Lord Salmon, Lord Keith of Kinkel and Lord Scarman - H.L. I suggestedin the Suisse Atlantique that these cases can be regarded as proceeding uponnormal principles applicable to the law of contract generally viz., that it is amatter of the parties' intentions whether and to what extent clauses in shippingcontracts can be applied after a deviation, i.e., a departure from the con-tractually agreed voyage or adventure. 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. change. Facts. It is not disputed that the act of Securicor's servant,Musgrove, in starting a fire in the factory which they had undertaken to protectwas a breach of contract by Securicor; and since it was the cause of an event,the destruction of the factory, that rendered further performance of the contractimpossible it is not an unnatural use of ordinary language to describe it as a"fundamental breach". The duty of Securicor was, as stated, to provide a service. It would be enough toput that upon its radical inconsistency with the Suisse Atlantique. I would, therefore, allowthe appeal. Lord Reid, in my respectful opinion, and I recognisethat I may not be the best judge of this matter, in his speech read as a whole,cannot be claimed as a supporter of a rule of law. Photo Production Ltd v Securicor Transport Ltd: HL 14 Feb 1980 Interpretation of Exclusion Clauses The plaintiffs had contracted with the defendants for the provision of a night patrol service for their factory. For the reasons given by Lord Wilberforce and in application of the principlesthat I have here stated, I would allow this appeal. Securicor appealed. The leading cases are Johnson v Agnew  AC 367 and Photo Productions v Securicor Transport Ltd  AC 827. In such a situation what the parties agreed (expressly orimpliedly) is what matters; and the duty of the courts is to construe theircontract according to its tenor. 447. Where what is promised will be done involves the doing of a physical act,performance of the promise necessitates procuring a natural person to do it; butthe legal relationship between the promisor and the natural person by whom theact is done, whether it is that of master and servant, or principal and agent, or ofparties to an independent sub-contract, is generally irrelevant. TheCourt of Appeal decided issue (i) in the respondents' favour invoking thedoctrine of fundamental breach. "Whether Musgrove intended to light only a small fire (which was the"very least he meant to do) or whether he intended to cause much more"serious damage, and, in either case, what was the reason for his act, are"mysteries I am unable to solve". I do not think that there is"generally much difficulty where the innocent party has elected to treat"the breach as a repudiation, bring the contract to an end and sue for"damages. Lord WilberforceLord DiplockLord SalmonLord Keith of KinkelLord Scarman. the plaintiffs' factory: that, and the efficacy of their fire precautions, would beknown to the plaintiffs. Indeed he expressly disagreedwith the Master of the Rolls' observations in two previous cases (Karsales(Harrow) Ltd. v. Wallis  1 WLR 936 and U.G.S. words of the contract. The question iswhether the appellant is liable to the respondents for this sum. Strictly speaking, to say that,"on acceptance of the renunciation of a contract, the contract is rescinded is"incorrect. Others, as decisions,may be justified as depending upon the construction of the contract (cf.Levison v. Patent Steam Carpet Cleaning Co. Ltd.  Q.B. It would be enough toput that upon its radical inconsistency with the Suisse Atlantique. Photo Production Ltd v Securior Transport Ltd  2 WLR 283; 1 All ER 556 This case considered the issue of exclusion clauses and whether or not an exclusion clause that exempted a party from damages arising from a breach of a fundamental obligation under the contract was valid. There are various statutory provisions which prevent the effect of certain exclusion clauses. "any injurious act or default by any employee".These words have to be approached with the aid of the cardinal rules of con-struction that they must be read contra proferentem and that in order to escapefrom the consequences of one's own wrongdoing, or that of one's servant, clearwords are necessary. All these difficulties arise from the doctrine andare left unsolved by it. Many difficult questions arise and will continueto arise in the infinitely varied situations in which contracts come to be breached—by repudiatory breaches, accepted or not, anticipatory breaches, by breachesof conditions or of various terms and whether by negligent, or deliberate actionor otherwise. I also agree that Harbutt'sPlasticine and the subsequent cases in which the so-called "rule of law" wasapplied to defeat exclusion clauses should be overruled, though the actualdecisions in some of the later cases might have been justified on the properconstruction of the particular exclusion clause on which the defendant relied. Photo Production v Securicor  AC 827 House of Lords A contract for provision of security services by Securicor at the Claimant’s factory. And he states in terms that this latterobligation "is just as much an obligation arising from the contract as are the"primary obligations that it replaces". For Iam convinced that, with the possible exception of Lord Upjohn whose criticalpassage, when read in full, is somewhat ambiguous, their Lordships, fairlyread, can only be taken to have rejected those suggestions for a rule of lawwhich had appeared in the Court of Appeal and to have firmly stated thatthe question is one of construction, not merely of course of the exclusion clausealone, but of the whole contract. The lengthy, and perhaps I may say sometimes indigestible speeches of their Lordships, are correctly summarised in the headnote - holding No. decided these issues in favour of the appellant. The fire spread accidentally and the Photo Productions plant was totally destroyed by fire, causing £648,000-worth of damage. The case is remembered for these principal reasons: White and Carter (Councils) Ltd v McGregor. To plead for complete uniformity may be to cry for the moon. How is the date of "termination" to be fixed? The House of Lords overturned the Court of Appeal and held that Securicor's exclusion clause was effective and exempt it from liability for damage. secondly, it is remembered as the high-water mark of the disputes between the Denning-led Court of Appeal and an increasingly unamused House of Lords, who strongly disapproved of Denning's attempts to remould the law in a manner that he perceived to fit the justice of the situation before him. In this situation the present case has to be decided. . In such a case the injured party may accept the renunciation as"a breach going to the root of the whole of the consideration. The bringing to an end of all primary obligations under the contract may alsoleave the parties in a relationship, typically that of bailor and bailee, in whichthey owe to one another by operation of law fresh primary obligations of whichthe contract is not the source; but no such relationship is involved in the instantcase. I am content to leave the matter there with some supplementary observa-tions. I agree with Lord Wilberforce's analysis of the. This secondary obligation topay compensation (damages) for non-performance of primary obligations I willcall the "general secondary obligation". He visited the factory at thecorrect time, but when inside he deliberately started a fire by throwing a matchon to some cartons. (If theexpression "fundamental breach" is to be retained, it should, in theinterests of clarity, be confined to this exception). Type Chapter Page start 305 Page end 311 Is part of Book Title ... Photo Production Ltd v Securicor Transport Ltd... Library availability. But if the parties wish to reject or modify primary obligationswhich would otherwise be so incorporated, they are fully at liberty to do so byexpress words. The Court of Appeal was, I think, bound so to hold by previous decisions ofits own, of which the first was Harbutt's Plasticine v. Wayne Tank Co.  1Q.B. [I leave aside arbitration clauses which do not come into operation until a partyto the contract claims that a primary obligation has not been proved.]. The"rule of law" theory which the Court of Appeal has adopted in the last decadeto defeat exclusion clauses is at first sight attractive in the simplicity of its logic.A fundamental breach is one which entitles the party not in default to elect toterminate the contract. Photo Production Ltd. v. Securicor Transport Ltd.,  AC 827 • clause was unambiguous. Photo Production Ltd and Securicor had a contract for the provision of security services by the latter to the former. What, for example, would have been the position of the respon-dents' factory if instead of being destroyed it had been damaged, slightly ormoderately or severely? As a preliminary, the natureof the contract has to be understood. Upon his doing so the contract comes to an end. contains alphabet), Photo Production Ltd v Securicor Transport Ltd. Get 1 point on adding a valid citation to this judgment. Justice MacKenna of the 7th day of April 1976 be,and the same is hereby, Restored: And it is furtherOrdered, That the Respondents do pay or cause to bepaid to the said Appellants the Costs incurred by themin the Court of Appeal and also the Costs incurred bythem in respect of the said Appeal to this House, theamount of such last-mentioned Costs to be certified bythe Clerk of the Parliaments if not agreed between theparties: And it is also further Ordered, That the Causebe, and the same is hereby, remitted back to the Queen'sBench Division of the High Court of Justice to dotherein as shall be just and consistent with thisJudgment. (old currency) per week it agreed to "provide their Night Patrol Service whereby"four visits per night shall be made seven nights per week and two visits shall"be made during the afternoon of Saturday and four visits shall be made during"the day of Sunday". thirdly, the case is a strong confirmation of the principles of the, This page was last edited on 16 March 2019, at 17:20. I have left out of account in this analysis as irrelevant to the instant case anarbitration or choice of forum clause. Iwould allow the appeal. The fallacy in the reasoning and what I venture to think is the disarray intowhich the common law about breaches of contract has fallen, is due to the usein many of the leading judgments on this subject of ambiguous or impreciseexpressions without defining the sense in which they are used. The fire got out of control and a large part of the premiseswas burnt down. It was not suggested that he was unsuitable for the job orthat the appellant was negligent in employing him. 2. Photo Production Ltd v Securicor Transport Ltd UKHL 2 (14 February 1980) Practical Law Case Page D-000-5794 (Approx. This is to be distinguished from "vicariousliability"—a legal concept which does depend upon the existence of a particularlegal relationship between the natural person by whom a tortious act was doneand the person sought to be made vicariously liable for it. My Lords, whatever the intrinsic merit of this doctrine, as to which I shallhave something to say later, it is clear to me that so far from following thisHouse's decision in the Suisse Atlantique it is directly opposed to it and thatthe whole purpose and tenor of the Suisse Atlantique was to repudiate it.The lengthy, and perhaps I may say sometimes indigestible speeches of theirLordships, are correctly summarised in the headnote—holding No. Securicor undertook to provide a serviceof periodical visits for a very modest charge which works out at 26p per visit. Shaw and Waller LJJ concurred. These passages I believe to state correctly the modern law of contract in therelevant respects: they demonstrate that the whole foundation of Harbutt'scase is unsound. The risk that a servant of Securicor would damage ordestroy the factory or steal goods from it, despite the exercise of all reasonablediligence by Securicor to prevent it, is what in the context of maritime law wouldbe called a "misfortune risk"—something which reasonable diligence of neitherparty to the contract can prevent. On the facts, Wilberforce found that the exclusion clause precluded all liability even when harm was caused intentionally. The contract incorporated printed Standard Conditionswhich, in some circumstances, might exclude or limit the appellant's liability.The questions in this appeal are (i) whether these conditions can be invoked atall in the events which happened and (ii) if so, whether either the exclusionprovision, or a provision limiting liability, can be applied on the facts. Donaldson J. inKenyon Son & Craven Ltd. v. Securicor Transport Ltd [ 1980 ] 827. 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