The Master of the Rolls considered the use of an exemption clause, saying that the Court was to consider first whether the breach was ‘fundamental’. If so, he said, the court itself deprives the party of the benefit of an exemption or limitation clause: ‘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’.
The Court referred to the construction of the contract not in its natural and literal sense but in the wider context of the presumed intention of the parties. Lord Denning said: ‘It seems to me that the two ways can be seen to meet in practice so as to produce a result in principle which may be stated thus: Although the clause in its natural and ordinary meaning would seem to give exemption or limitation if the court can say, ‘The parties as reasonable men cannot have intended that there should be exemption or limitation in the case of such a breach as this’. In so stating the principle there arises in these cases the figure of the fair and reasonable man; an the spokesman of this fair and reasonable man, as Lord Radcliffe once said, is and must be the court itself: see Davis Contractors Ltd v. Earcham Urban District Council.
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 whether it was in a standard form, whether there was equality of bargaining power, the nature of the breach, and do forth.’
Lord Denning MR
[1978] 1 WLR 856, [1978] 3 All ER 146
England and Wales
Cited by:
Appeal from (CA) – 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. 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 . .
Lists of cited by and citing cases may be incomplete.
Updated: 14 October 2021; Ref: scu.653284
