Even though a shipowner who had carried cargo on deck was not entitled to rely on the exceptions to liability in his contract, a limitation clause was different and should not be construed by reference to the specially exacting standards applicable to exclusion and indemnity clauses. The words of exclusion must be clear and unambiguous, and should, failing this, be construed strictly against the proponent (contra preferentem) and is seeking to rely on them.
Lord Fraser said: ‘these principles [i.e., those applicable to exclusion and indemnity clauses] are not applicable in their full rigour when considering the effect of clauses merely limiting liability. Such clauses will of course be read contra proferentem and must be clearly expressed , but there is no reason why they should be judged by the specially exacting standards which are applied to exclusion and indemnity clauses. The reason for imposing such standards on these clauses is the inherent improbability that the other party to a contract including such a clause intended to release the proferens from a liability that would otherwise fall upon him. But there is no such high degree of improbability that he would agree to a limitation of the liability of the proferens, especially when . . the potential losses that might be caused by the negligence of the proferens or its servants are so great in proportion to the sums that can reasonably be charged for the services contracted for . .’
Lord Wilberforce said that limitation clauses are not viewed with the same hostility as are exclusion clauses.
Judges:
Lord Fraser, Lord Wilberforce
Citations:
[1983] 1 WLR 964, [1981] UKHL 12, [1983] 1 All ER 101, 1982 SLT 377
Links:
Statutes:
Jurisdiction:
England and Wales
Citing:
Cited – Canada Steamship Lines Ltd v The King PC 21-Jan-1952
A lease of a freight shed exonerated the lessor from ‘any claim . . for . . damage . . to . . Goods . . being . . in the said shed’ and requiring the lessee to indemnify the lessor ‘from and against all claims’. The negligent use of an oxy-acetylene . .
Cited by:
Cited – Daewoo Heavy Industries Ltd and Another v Klipriver Shipping Ltd and Another CA 3-Apr-2003
The carrier had loaded the cargo on the ship’s deck, despite a clause requiring it to be stowed in a hold. The charterparty sought to use the breach to remove the carrier’s limit of liability. The older form of Hague rules applied.
Held: It . .
Applied – Bovis Construction (Scotland) Ltd v Whatlings Construction Ltd HL 19-Oct-1995
The managing contractors sought damages from a sub-contractor. The contract was on a printed form and in letters. A letter limited time related damages to pounds 100,000. The main contractors sought a much larger sum.
Held: A clause seeking to . .
Cited – Amiri Flight Authority v BAE Systems Plc CA 17-Oct-2003
The appellant had contracted to purchase maintenance from the defendant of aircraft it had also purchased from them. They sought damages for negligence, saying the defendants had failed to prevent a known risk of corrosion. The defendants argued . .
Cited – Frans Maas (Uk) Ltd v Samsung Electronics (Uk) Ltd ComC 30-Jun-2004
A large volume of mobile phones were stolen from a warehouse. The owner claimed damages from the bailee. The defendant said that standard terms applied limiting their responsibility to value calculated by weight.
Held: There was a bailment . .
Cited – HIH Casualty and General Insurance Limited and others v Chase Manhattan Bank and others HL 20-Feb-2003
The insurance company had paid claims on policies used to underwrite the production of TV films. The re-insurers resisted the claims against them by the insurers on the grounds of non-disclosure by the insured, or in the alternative damages for . .
Cited – George Mitchell (Chesterhall) Ltd v Finney Lock Seeds Ltd CA 29-Sep-1982
The buyer bought 30lbs of cabbage seed, but the seed was not correct, and the crop was worthless. The seed cost pounds 192, but the farmer lost pounds 61,000. The seed supplier appealed the award of the larger amount and interest, saying that their . .
Cited – Societe Generale, London Branch v Geys SC 19-Dec-2012
The claimant’s employment by the bank had been terminated. The parties disputed the sums due, and the date of the termination of the contract. The court was asked ‘Does a repudiation of a contract of employment by the employer which takes the form . .
Lists of cited by and citing cases may be incomplete.
Contract, Transport, Scotland
Updated: 18 November 2022; Ref: scu.181088