May 21, 2012

Smith -v- Mules; 17-Feb-1852

A. and B. and the son of B. entered into partnership as solicitors, and by articles agreed that the partners were diligently and faithfully to employ themselves in carrying on and managing all the professional business in which they or either of them might be employed or concerned ; that B. should use his best endeavours to obtain the appointment of the partnership firm to three offices or clerkships, which were then held by B., and such offices should be partnership appointments ; that all other compatible offices should be obtained, if possible, in the name of the firm, and the emoluments treated as part of the profits of the partnership; that, if B. or his son should retire, or A. or B. or his son should die, the share of the deceased partner should accrue to the surviving partners : that if B. or his son retired they were to use their best endeavours to secure the practice to the continuing partners, and such retiring partner shouId not practise within 30 miles ; that, if either partner should not diligently and faithfully employ himself in carrying on the said partnership practice, and should, on receiving monies, bills, notes, &c., knowingly or wilfully omit immediately to make entries thereof, or if A. or the son of B. should absent himself more than two months in one year, the others or other of the partners, if they or he should think fit, should be at liberty to dissolve the partnership, by giving to the offending partner a notice to that effect, and the partnership should from that time, or the time specified in the notice, be dissolved in the same manner and with the same consequences as if it had determined by the voluntary retirement of the offending partner. B. and his son subsequently prooured their own appointment, or the appointment of one of them, to the offices or clerkships, and did not endeavour to procure the appointment of A. It was afterwards discovered that B. was greatly involved in debt, and he absconded in January 1849, and did not return to the business, In May 1849 A, served a notice, in the manner pointed out by the articles, on B. and his son to dissolve the partnership from that date ; and he then filed his bill against B. and his son to have the dissolution declared by the Court, an injunction to restrain them from practising within 30 miles, and a decree that they should resign the several offices or clerkships. Held, that the Plaintiff was entitled to dissolve the partnership as to B., but not as against the other partner (the son of B.), and that he was not entitled to dissolve it by notice under the 16th clause without the concurrence of his co-partner (the son).
That B., not having procured or endeavoured to procure for the partnership firm the appointments to the several offices or clerkships, so as to give the Plaintiff at the dissolution either a share of the profits of the offices or the chance of competing for them, but such appointments having been procured for B. and his son to the exclusion of the Plaintiff, B. and his son were not to be allowed to retain the offices for their exclusive benefit.
That,inasmuch as, from the nature of the offices, they could not be sold, nor could any manager or receiver be appointed to carry them on, the Defendants ought to be charged with the value of the offices in the partnership accounts.
That, the Plaintiff having given a notice of dissolution (acting under the 16th clause), and his co-partner having adopted it, the partnership should be treated as dissolved from the time of the notice, although not with the consequences attaching to a dissolution under the 15th clause.
That, the consequences of a dissolution uncler the 15th clause not having attached, the Plaintiff, therefore, was not entitled to the injunction to restrain the Defendants from practising within 30 miles.
An agreement that, if any of several partners should not diligently and faithfully employ himself in carrying on the partnership practice, the others might give notice of dissolution, construed to refer to the diligent and faithful discharge by each partner of the portion of business carried on by him.

Date: 17-Feb-1852
Links: Commonlii,
References: [1852] EngR 271, (1851-1852) 9 Hare 556, (1852) 68 ER 633
Cited By:
  • Faulks -v- Faulks, ChD, Cited, ([1992] 1 EGLR 9)

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May 21, 2012

Hong Kong Fir Shipping Co -v- Kawasaki Kisen Kaisha Ltd; CA 20-Dec-1961

The plaintiffs had recently acquired the ship the ‘Hong Kong Fir’ and contracted to charter it to the defendants, but being late in delivering it, the defendants cancelled the charterparty contract. The plaintiffs said the repudiation was wrongful, and that the ship was fit to charter.
Held: ‘authority over many decades and reason support the conclusion in this case that there was no breach of a condition which entitled the charterers to accept it as repudiation and to withdraw from the charter. It was not contended that the maintenance clause is so fundamental a matter as to amount to a condition of the contract. It is a warranty which sounds in damages.’ and ‘If what is done or not done in breach of the contractual obligation does not make the performance a totally different performance of the contract from that intended by the parties, it is not so fundamental as to undermine the whole contract.’
Upjohn LJ said: ‘the remedies open to the innocent party for breach of a stipulation which is not a condition strictly so called, depend entirely upon the nature of the breach and its foreseeable consequences. Breaches of stipulation fall, naturally, into two classes. First there is the case where the owner by his conduct indicates that he considers himself no longer bound to perform his part of the contract; in that case, of course, the charterer may accept the repudiation and treat the contract as at an end. The second class of case is, of course, the more usual one and that is where due to misfortune such as the perils of the sea, engine failures, incompetence of the crew and so on, the owner is unable to perform a particular stipulation precisely in accordance with the terms of the contract try he never so hard to remedy it. In that case the question to be answered is, does the breach of the stipulation go so much to the root of the contract that it makes further commercial performance of the contract impossible, or in other words is the whole contract frustrated? If yea, the innocent party may treat the contract as at an end. If nay, his claim sounds in damages only. This is a question of fact fit for the determination of a jury.’
The test for whether there has been a repudiatory breach of a contract was set out. Diplock LJ said: ‘The test whether an event has this effect or not has been stated in a number of metaphors all of which I think amount to the same thing: does the occurrence of the event deprive the party who has further undertakings still to perform of substantially the whole benefit which it was the intention of the parties as expressed in the contract that he should obtain as the consideration for performing those undertakings?’ Though a term (in this case a ‘seaworthiness’ term) was not a ‘condition’ in the technical sense, it might still be a term breach of which if sufficiently serious could go to the root of the contract.

Court: CA
Date: 20-Dec-1961
Judges: Sellers, Upjohn, Diplock LJJ
Links: Bailii,
References: [1962] 2 QB 26, [1961] EWCA Civ 7, [1962] 1 All ER 474
Cases Cited:
  • Universal Cargo Carriers Corporation -v- Citati, , Approved, ([1957] 2 QB 402)
  • Boone -v- Eyre, , Applied, ((1777) 1 Hy Bl 273)
  • Ritchie -v- Atkinson, , Cited, ((1808) 10 East 295)
  • Havelock -v- Geddes, , Cited, ((1809) 10 East 555)
  • Bradford -v- Williams, , Cited, ((1872) 7 Exch 259)
  • Tarrabochia -v- Hickie, , Cited, ((1856) 1 Hurlstone & Norman 183)
  • Davidson -v- Gwynne, , Cited, ([1810] 12 East 381)
  • Stanton -v- Richardson, , Cited, ([1874] 9 Common Pleas 390)
  • Tully -v- Howling, , Cited, ([1877] 2 QB 182)
  • Bentsen -v- Taylor Sons & Co, , Cited, ([1893] 2 QB 281)
  • Kish -v- Taylor, , Cited, ([1912] AC 604)
  • Freeman -v- Taylor, , Cited, ([1846] 8 Bingham 124)
  • Jackson -v- Union Marine Insurance Co Ltd, CCP, Cited, ([1874] LR 10 CP 125, [1874-80] All ER REP 317, 44 LJCP 27, [1874] 31 LT 789, [1874] 23 WR 169, [1874] 2 Asp MLC 435)

Cited By:
  • Peregrine Systems Ltd -v- Steria Ltd, CA, Cited, (Bailii, [2005] EWCA Civ 239)
  • Astea (Uk) Ltd -v- Time Group Ltd, TCC, Cited, (Bailii, [2003] EWHC 725 (TCC), [2003] All ER (D) 212)
  • F L Schuler AG -v- Wickman Machine Tools Sales Limited, HL, Cited, ([1973] 2 All ER 39, [1973] 2 WLR 683, [1973] 2 Lloyds Rep 53, [1974] AC 235, Bailii, [1973] UKHL 2)
  • Anglo Group Plc, Winther Brown & Co Ltd -v- Winter Brown & Co Ltd, BML (Office Computers) Ltd, Anglo Group Plc, BML (Office Computers) Ltd, TCC, Cited, (Bailii, [2000] EWHC Technology 127)
  • Stocznia Gdynia Sa -v- Gearbulk Holdings Ltd, CA, Cited, (Bailii, [2009] EWCA Civ 75, [2010] QB 27)
  • TTM -v- London Borough of Hackney and Others, CA, Cited, (Bailii, [2011] EWCA Civ 4)
  • Lombard North Central -v- Butterworth, CA, Cited, (Bailii, [1986] EWCA Civ 5, [1987] QB 527, [1987] 1 All ER 267, [1987] 2 WLR 7)

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May 21, 2012

Entores Ltd -v- Miles Far East Corporation; CA 1955

The plaintiff traded from London, and telexed an offer to purchase cathodes to a company in Holland, who signified their acceptance by return, again by telex. Entores later wanted to sue the defendant, the parent company of the dutch party. It was denied that a contract had come into existence within the UK jurisdiction.
Held: the resultant contract was made in, and was actionable in, London. For instantaneous communications, such as by fax, there is acceptance at the place where the offeror receives the acceptance of the offer, though in such a case, ‘The contract is only complete when the acceptance is received by the offeror’.

Court: CA
Date: 01-Jan-1955
Judges: Lord Denning
Links: Bailii,
References: [1955] 2 All ER 394, [1955] 2 QB 327, [1955] EWCA Civ 3, [1955] 3 WLR 48, [1955] 1 Lloyds Rep 511, 99 Sol Jo 384
Cases Cited:
  • Carlill -v- Carbolic Smoke Ball Co, CA, Considered, ([1893] 1 QB 256, [1892] 4 All ER Rep 127, [1892] 62 LJ QB 257, [1892] 67 LT 837, [1892] 57 JP 325, [1892] 41 WR 210, [1892] 9 TLR 124, [1892] 4 R 176, lip, Hamlyn, Justis, Bailii, [1892] EWCA Civ 1)

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May 21, 2012

H & R Ecroyd -v- Commission; ECFI 20-May-1999

ECFI Preliminary rulings – Assessment of validity – Declaration that a regulation is invalid – Effects – Application by analogy of Article 176 of the Treaty (now Article 233 EC)- Obligations of the Community institutions – Scope – Compensation for damage caused by the illegality found – Covered
(EC Treaty, Arts 176, 177 and 215, second para. (now Arts 233 EC, 234 EC and 288, second para., EC)
When, in proceedings under Article 177 of the EC Treaty (now Article 234 EC), the Court of Justice rules that an act adopted by the Community legislature is invalid, its decision has the legal effect of requiring the competent Community institutions to adopt the measures necessary to remedy that illegality. They must therefore take the measures necessary to comply with that judgment in the same way as they must, under Article 176 of the Treaty (now Article 233 EC), in the case of a judgment annulling a measure or declaring that the failure of a Community institution to act is unlawful. When a Community measure is held to be invalid by a preliminary ruling, the obligation laid down by Article 176 of the Treaty applies by analogy.
The obligation on the institutions to take the measures necessary to remedy illegalities found by the Community judicature requires them not only to adopt the essential legislative or administrative measures but also to make good damage which has resulted from the unlawful act, subject to fulfilment of the conditions laid down in the second paragraph of Article 215 of the Treaty (now the second paragraph of Article 288 EC)concerning the presence of fault, harm and a causal link.

Court: ECFI
Date: 20-May-1999
Judges: Moura Ramos P
Statutes: Regulation (EEC)No 804/68 of 27 June 1968 on the common organisation of the market in milk and milk products
Links: Europa, Bailii,
References: T-220/97, [1999] EUECJ T-220/97

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May 21, 2012

The Queen -v- Ministry of Agriculture, Fisheries and Food, ex parte Ecroyd Limited; ECJ 6-Jun-1996

The competent national authority had no duty under Regulation No 857/84, as amended by Regulation No 764/89, and in particular under Article 3a(1) thereof, to award a provisional special reference quantity exempt from the additional levy on milk to a producer who had obtained primary quota in respect of a separate holding and who, following the dissolution of a partnership in which it was a partner, took over the assets and business of the dissolved partnership and became sole operator of that partnership’ s holding while observing, without having formally undertaken to do so, the non-marketing undertaking previously given by that partnership, and, furthermore, the competent national authority had no power to do so.
To be eligible for a provisional special reference quantity under the relevant rules, the producer must not only have participated, either in that capacity or as successor to an agricultural holding, in a non-marketing scheme such as that established by Regulation No 1078/77, but must also not have obtained a reference quantity under the conditions laid down, inter alia, by Article 2 of Regulation No 857/84. Although the first condition must be regarded as having been satisfied by the producer in question, because the failure to perform a mere formality, such as the giving of a written undertaking to continue to perform the obligations entered into by its predecessor, cannot be regarded as causing the successor to an agricultural holding to be excluded from the non-marketing scheme, as would be the case if it had not in fact observed the non-marketing undertaking, the second condition is not satisfied where that producer has already obtained primary quota under Article 2 of Regulation No 857/84 in respect of the five farms on which it had continued milk production.
The fact that the Court held in its judgment in Case C-264/90 Wehrs v Hauptzollamt Lueneburg [1992] ECR I-6285 that the second indent of Article 3a(1) was invalid in so far as transferees of a premium granted pursuant to Regulation No 1078/77, to whom the producer in question is comparable, were barred from allocation of a special reference quantity if they had received a reference quantity under Article 2 of Regulation No 857/84, neither required nor empowered the competent national authority to award to that producer a special reference quantity, whether provisional or definitive, exempt from the additional levy on milk.
The conclusions which may be drawn in the national legal systems from a ruling of invalidity of a measure adopted by an institution depend, on any view, directly on Community law as it stands in the light of that ruling. In the presence of a complex system such as that of milk quotas, the relevant state of the law following the ruling of invalidity in the judgment in Wehrs and before the adoption of Regulation No 2055/93 did not of itself, that is to say without readjustment of that system, permit the allocation of a special reference quantity to such a producer.
2. The competent national authority had no duty under Regulation No 857/84, as amended by Regulation No 764/89 and Regulation No 1639/91, and in particular under the second indent of the last subparagraph of Article 3a(1) thereof, to award a special reference quantity exempt from the additional levy on milk to a producer who had commenced production on a holding as sub-tenant after the expiry of a non-marketing period under Regulation No 1078/77 before then becoming also owner of that holding subject to a lease granted to the tenant, nor did it have the power to do so, since that producer, even assuming that the holding had been transferred to him through an inheritance or similar means within the period laid down, could, as successor, claim such a quantity only on the same basis as the originator of the inheritance himself and since the rules in force did not permit the award of such a quantity to any of his predecessors.
The fact that the second indent of Article 3a(1) was declared invalid by the Court in its judgment in Case C-264/90 Wehrs [1992] ECR I-6285 in that it made the award of a reference quantity to a predecessor of the producer subject to a condition which precisely that predecessor did not fulfil, in no way altered the duty or power of the national authority to award a special reference quantity to that producer. That ruling of invalidity cannot by itself give rise, prior to the readjustment of the system of reference quantities which it made necessary, to a right of the predecessor to such a quantity.
The fact that Article 3a, as amended by Regulation No 1639/91, does not permit the award of a reference quantity to that producer does not constitute an infringement of the principle of protection of legitimate expectations, since, although he can invoke his status as successor, he cannot, in that capacity, lay claim to more than his predecessors, who could not claim the award of a special reference quantity.

Court: ECJ
Date: 06-Jun-1996
Judges: Edward P
Links: Europa, Bailii,
References: C-127/94, [1996] EUECJ C-127/94

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May 21, 2012

Bunge Corporation (New York) -v- Tradax Export Sa (Panama); HL 25-Feb-1981

The fob contract for the sale of goods required the buyers to give notice of the probable readiness of the ships on which the goods were to be carried. The notice was given four days too late. The sellers declared the buyers in default and claimed damages for default on the basis that the term as to notice was a condition. The damages claimed were the difference between the contract price and the market price. The sellers did not contend that, if the term was not a condition, the delay of four days amounted to a repudiation. The breach complained of consisted not of giving less than the requisite number of days’ notice under the contract, but of giving notice after the last date on which it could legitimately be given because the required 15 days notice would have ended after the last possible date for shipment. The House considered the construction of clause 7 of GAFTA 119, and in particular whether it was a condition or warranty, and whether time was of the essence.
Held: Whether a time limit is of the essence of a contractual provision is a question of interpretation.
Lord Wilberforce said: ‘As to such a clause there is only one kind of breach possible, namely to be late, and the questions to be asked are: first what importance have the parties expressly ascribed to this consequence? And, second, in the absence of expressed agreement, what consequence ought to be attached to it having regard to the contract as a whole?’ and ‘In conclusion, the statement of the law in Halsbury’s Laws of England, 4th ed., vol. 9 (1974), paras. 481-482, including the footnotes to paragraph 482 (generally approved in the House in the United Scientific Holdings case), appears to me to be correct, in particular in asserting (1) that the court will require precise compliance with stipulations as to time wherever the circumstances of the case indicate that this would fulfil the intention of the parties, and (2) that broadly speaking time will be considered of the essence in ‘mercantile’ contracts ? with footnote reference to authorities which I have mentioned.’
Lord Lowry said: ‘It is by construing a contract (which can be done as soon as the contract is made) that one decides whether a term is, either expressly or by necessary implication, a condition, and not by considering the gravity of the breach of that term (which cannot be done until the breach is imminent or has occurred).’

Court: HL
Date: 25-Feb-1981
Judges: Lord Wilberforce, Lord Fraser of Tullybelton, Lord Scarman, Lord Lowry, Lord Roskill
Links: Bailii,
References: [1981] UKHL 11, [1981] 2 All ER 513, [1981] 1 WLR 711, [1981] 2 Lloyds Rep 1
Cases Cited:
  • Bunge Corporation -v- Tradax, CA, Appeal from, ([1980] 1 Lloyd's Rep.294)

Cited By:
  • Lombard North Central -v- Butterworth, CA, Cited, (Bailii, [1986] EWCA Civ 5, [1987] QB 527, [1987] 1 All ER 267, [1987] 2 WLR 7)
  • Lombard North Central -v- Butterworth, CA, Cited, (Bailii, [1986] EWCA Civ 5, [1987] QB 527, [1987] 1 All ER 267, [1987] 2 WLR 7)

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May 21, 2012

Steedman -v- William R Drinkle and Another; PC 21-Dec-1915

(Saskatchewan) Land in Canada was purchased under an agreement, where the price was to be paid by one initial payment and annual instalments. If the purchaser was to default on any payment, the vendor was free to cancel the agreement and to retain, as liquidated damages, the payments already made. It was also provided that time was to be considered as of the essence of the contract. The first deferred payment was not made on the due date. The vendor gave notice cancelling the agreement. Three weeks after the due date the purchaser tendered the amount due, which was refused. He thereupon brought an action claiming specific performance and relief from forfeiture of the amount already paid.
Held: The Board upheld the decision of the Canadian Court, that the stipulation as to the retention of the sums already paid was a penalty. But the Board declined to grant specific performance.
Viscount Haldane said:
‘Courts of Equity, which look at the substance as distinguished from the letter of agreements, no doubt exercise an extensive jurisdiction which enables them to decree specific performance where justice requires it, even though literal terms as to stipulation as to time have not been observed. But they never exercise this jurisdiction where the parties have expressly intimated in their agreement that it is not to apply by providing that time is to be of the essence of the bargain’.
And ‘As to the relief from forfeiture, their Lordships think that the Supreme Court was right in holding, for the reasons assigned in the former decision of this Board, that the stipulation in question was one for a penalty, against which relief should be given on proper terms. But as regards specific performance they are of opinion that the Supreme Court was wrong in reversing the judgment of Newlands J. Courts of Equity, which look at the substance as distinguished from the letter of agreements, no doubt exercise an extensive jurisdiction which enables them to decree specific performance in cases where justice requires it, even though literal terms of stipulations as to time have not been observed. But they never exercise this jurisdiction where the parties have expressly intimated in their agreement that it is not to apply by providing that time is to be of the essence of their bargain. If, indeed, the parties, having originally so provided, have expressly or by implication waived the provision made, the jurisdiction will again attach.’

Court: PC
Date: 21-Dec-1915
Judges: Viscount Haldane
Links: Bailii,
References: [1915] UKPC 71, [1916] AC 275

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May 21, 2012

Peabody Donation Fund -v- Hay; CA 1986

After a warrant for possession has been executed, the court’s inherent jurisdiction to re-instate a tenant is available only where the original judgment is set aside or there is shown to have been some abuse of process in the obtaining of the warrant. The court made it clear that it cannot add to the requirements of the rules by treating failure to give notice to the occupier of the obtaining of a warrant for possession as being oppressive or an abuse of process.

Court: CA
Date: 01-Jan-1986
References: [1986] 19 HLR 145,
Cited By:
  • Chater -v- Mortgage Agency Services Number Two Ltd, CA, Cited, (Bailii, [2003] EWCA Civ 490)

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May 21, 2012

Peabody Donation Fund -v- Sir Lindsay Parkinson & Co Ltd; HL 18-Oct-1983

Architects proposed a system of flexible drains for a site, but the contractors persuaded them to accept rigid drains which once laid proved inadequate at considerable cost. The local authority permitted the departure from the plans.
Held: The true question to found negligence was whether the particular defendant owed the particular plaintiff a duty of care having the scope pleaded, and that it was reasonable for that duty to be imposed. It wa not reasonable to impose a duty on the local authority here to indemnify the builders from relying upon the advice of their own architects and contractors.

Court: HL
Date: 18-Oct-1983
Judges: Lord Keith
Links: Bailii,
References: [1985] AC 210, [1984] 3 WLR 953, [1983] UKHL 5
Cases Cited:
  • Dorset Yacht Co Ltd -v- Home Office, HL, Applied, ([1970] AC 1004, [1970] 2 WLR 1140, [1970] 2 All ER 94, Bailii, [1970] UKHL 2)
  • Anns and Others -v- Merton London Borough Council, HL, Cited, (lip, [1978] AC 728, [1977] CLY 2030, [1977] 2 All ER 492, Bailii, [1977] UKHL 4)
  • Dennis -v- Charnwood Borough Council, CA, Cited, ([1983] CLY 2535, [1983] 81 LGR 275)

Cited By:
  • Commissioners of Customs & Excise -v- Barclays Bank Plc, ComC, Cited, ([2004] EWHC 122 (Comm Court), Bailii, [2004] 1 WLR 2027)
  • Jones -v- Department of Employment, CA, Cited, ([1989] QB 1, [1988] 2 WLR 493)
  • CBS Songs Ltd -v- Amstrad Consumer Electronics Plc, HL, Cited, ([1988] AC 1013, [1988] 2 WLR 1191, Bailii, [1988] UKHL 15, [1988] 2 FTLR 168, [1988] RPC 567, [1988] 2 All ER 484)
  • Victoria Florence Welton, David John Welton -v- North Cornwall District Council, CA, Cited, (Gazette 18-Sep-96, Times 18-Jul-96, Bailii, [1996] EWCA Civ 516, [1997] 1 WLR 570)

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May 21, 2012

Photo Production Ltd -v- Securicor Transport Ltd; HL 14-Feb-1980

The plaintiffs had contracted with the defendants for the provision of a night patrol service for their factory. The perils the parties had in mind were fire and theft. A patrol man deliberately lit a fire which burned down the factory. It was an unresolved issue whether the employee intended to cause only a small fire or burn down the whole factory
Held: The question of whether particular clauses applied to excuse or limit liability was solely a matter of construction of the contract. The doctrine of fundamental breach had no significant part to play. The court analysed the distinction between primary and secondary obligations. A fundamental breach, whilst bringing to an end primary obligations under the contract, does not necessarily bring to an end secondary obligations, such as exclusion clauses. There was no rule of law that liability could not be excluded, let alone limited in respect of deliberate breach.
Lord Diplock said: ‘My Lords, an exclusion clause is one which excludes or modifies an obligation, whether primary, general secondary or anticipatory secondary, that would otherwise arise under the contract by implication of law. Parties are free to agree to whatever exclusion or modification of all types of obligations as they please within the limits that the agreement must retain the legal characteristics of 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 a general secondary obligation to pay to the other party a sum of money that is manifestly intended to be in excess of the amount which would fully compensate the other party for the loss sustained by him in consequence of the breach of primary obligation. Since the presumption is that the parties by entering into the contract intended to accept the implied obligations exclusion clauses are to be construed strictly and the degree of strictness appropriate to be applied to their construction may properly depend upon the extent to which they involve departure from the implied obligations. Since the obligations implied by law in a commercial contract are those which, by judicial consensus over the years or by Parliament in passing a statute, have been regarded as obligations which a reasonable businessmen would realise that he was accepting when he entered into a contract of a particular kind, the court’s view of the reasonableness of any departure from the implied obligations which would be involved in construing the express words of an exclusion clause in one sense that they are capable of bearing rather than another, is a relevant consideration in deciding what meaning the words were intended by the parties to bear. But this does not entitle the court to reject the exclusion clause, however unreasonable the court itself may think it is, if the words are clear and fairly susceptible of one meaning only.
My Lords, the reports are full of cases in which what would appear to be very strained constructions have been placed upon exclusion clauses, mainly in what today would be called consumer contracts and contracts of adhesion. As Lord Wilberforce has pointed out, any need for this kind of judicial distortion of the English language has been banished by Parliament’s having made these kinds of contracts subject to the Unfair Contract Terms Act 1977. In commercial contracts negotiated between businessmen capable of looking after their own interests and of deciding how risks inherent in the performance of various kinds of contract can be most economically borne (generally by insurance), it is, in my view, wrong to place a strained construction upon words in an exclusion clause which are clear and fairly susceptible of one meaning only even after due allowance has been made for the presumption in favour of the implied primary and secondary obligations.’

Court: HL
Date: 14-Feb-1980
Judges: Lord Diplock
Statutes: Unfair Contract Terms Act 1977
Links: Bailii,
References: [1980] AC 827, [1980] UKHL 2, [1980] 1 All ER 556
Cases Cited:
  • Morris -v- C W Martin & Sons Ltd, CA, Explained, ([1966] 1 QB 716)

Cited By:
  • Campbell -v- Frisbee, ChD, Cited, (Bailii, [2002] EWHC 328 (Ch))
  • Daewoo Heavy Industries Ltd and Another -v- Klipriver Shipping Ltd and Another, CA, Cited, (Bailii, [2003] EWCA Civ 451, Times 17-Apr-03)
  • Manx Electricity Authority -v- J P Morgan Chase Bank, CA, Cited, (Bailii, [2003] EWCA Civ 1324)
  • Port Jackson Stevedoring Pty Ltd -v- Salmond and Spraggon (Australia) Pty Ltd; The New York Star, PC, Cited, ([1981] 1 WLR 138)
  • Super Chem Products Limited -v- American Life and General Insurance Company Limited and Others, PC, Cited, (Bailii, [2004] UKPC 2, Times 28-Jan-04, PC, PC, PC, [2004] 2 All ER 358)
  • Associated Deliveries Ltd -v- Harrison, CA, Cited, ([1984] 2 EGLR 76, (1984) 272 EG)
  • Christopher Moran Holdings Ltd -v- Bairstow and Another, HL, Cited, (House of Lords, Bailii, [1999] UKHL 2)
  • Frans Maas (Uk) Ltd -v- Samsung Electronics (Uk) Ltd, ComC, Cited, (Bailii, [2004] EWHC 1502 (Comm), [2004] 2 Lloyds Rep 251)
  • Lister and Others -v- Hesley Hall Ltd, HL, Cited, (Times 10-May-01, Gazette 14-Jun-01, Bailii, House of Lords, [2001] UKHL 22, [2002] 1 AC 215, [2001] 2 All ER 769, [2001] 2 FCR 97, (2001) 3 LGLR 49, [2001] NPC 89, [2001] Fam Law 595, [2001] 2 WLR 1311, [2001] IRLR 472, [2001] ICR 665, [2001] Emp LR 819, [2001] 2 FLR 307, [2001] ELR 422)
  • Harding -v- Wealands, HL, Cited, (Times 06-Jul-06, Bailii, [2006] UKHL 32, [2006] 3 WLR 83)
  • George Mitchell (Chesterhall) Ltd -v- Finney Lock Seeds Ltd, CA, Cited, (Bailii, [1982] EWCA Civ 5, [1983] 1 All ER 108, [1983] QB 284)
  • Rock Refrigeration Limited -v- Jones and Seward Refrigeration Limited, CA, Cited, (Gazette 06-Nov-96, Times 17-Oct-96, Bailii, [1996] EWCA Civ 694)
  • Stocznia Gdynia Sa -v- Gearbulk Holdings Ltd, CA, Cited, (Bailii, [2009] EWCA Civ 75, [2010] QB 27)
  • Lombard North Central -v- Butterworth, CA, Cited, (Bailii, [1986] EWCA Civ 5, [1987] QB 527, [1987] 1 All ER 267, [1987] 2 WLR 7)

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