A valuable Chinese carpet had been taken for cleaning but was lost by the bailee. The bailee said that his liability was limited under the terms of the contract to a particular sum. A fundamental breach is ‘a breach going to the root of the contract’. The claimant pleaded by way of reply that the carpet had been lost by reason of a fundamental breach. The question arose whether the burden lay upon the bailor to establish a fundamental breach of contract or upon the bailee to establish that there had been no fundamental breach of contract.
Held: Whilst recognising that there had been conflicting decisions, the burden lay upon the bailee to establish that there been no fundamental breach.
Lord Denning MR said: ‘Upon principle, I should have thought that the burden was on the cleaners to prove that they were not guilty of a fundamental breach. After all, Mrs. Levison does not know what happened to it. The cleaners are the ones who know, or should know, what happened to the carpet, and the burden should be on them to say what it was . . It is, therefore, a moot point for decision. On it I am clearly of opinion that, in a contract of bailment, when a bailee seeks to escape liability on the ground that he was not negligent or that he was excused by an exception or limitation clause, then he must show what happened to the goods. He must prove all the circumstances known to him in which the loss or damage occurred. If it appears that the goods were lost or damaged by a slight breach – not going to the root of the contract- he may be protected by the exemption or limitation clause. But, if he leaves the cause of loss or damage undiscovered and unexplained – then I think he is liable: because it is then quite likely that the goods were stolen by one of his servants; or delivered by a servant to the wrong address; or damaged by reckless or wilful misconduct; all of which the offending servant will conceal and not make known to his employer. Such conduct would be a fundamental breach against which the exemption or limitation clause will not protect him.’
Orr LJ said: ‘as a matter both of justice and of common sense the burden ought to rest on the bailee who, if the goods have been lost whilst in his possession, is both more likely to know the facts and in a better position to ascertain then than the bailor.’
Sir David Cairns said: ‘however difficult it may sometimes be for a bailee to prove a negative, he is at least in a better position than the bailor to know what happened to the goods while in his possession.’
Judges:
Lord Denning MR, Orr LJ, Sir David Cairns
Citations:
[1978] 1 QB 69, [1977] 3 All ER 498
Jurisdiction:
England and Wales
Cited by:
Mentioned – 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 . .
Lists of cited by and citing cases may be incomplete.
Contract, Agency
Updated: 05 May 2022; Ref: scu.266867
