A question arose, in the context of dispute between a consignee of goods and stevedores, whether the latter could rely on a time bar. It was argued that because of the fundamental nature of the breach, the stevedore had deprived itself of the benefit of clause 17 of the bill of lading – the time bar clause.
Held: Lord Wilbeforce said: ‘A breach of a repudiatory character, which he contended that the breach in question was, entitles the innocent party, unless he waives the breach, to claim to be released from further performance of his obligations under the contract . . One of these obligations, counsel proceeded to argue, was to bring any action upon the breach within a period of one year, and the innocent party was released from this obligation. An alternative way of putting it was that the bringing of suit within one year was a condition with which the innocent party was obliged to comply: the repudiatory breach discharged this condition . . Their Lordships’ opinion upon these arguments is clear. However adroitly presented, they are unsound, and indeed unreal.’ The clause was all embracing: ‘it is quite unreal to equate this clause with those provisions in the contract which relate to performance. It is a clause which comes into operation when contractual performance has become impossible, or has been given up: then, it regulates the manner in which liability for breach of contract is to be established. In this respect their Lordships find it relevantly indistinguishable from an arbitration clause, or a forum clause, which, on clear authority, survive a repudiatory breach’. And ‘Mr Hobhouse appealed for support to some observations by Lord Diplock in Photo Production Ltd v Securicor Transport Ltd, where reference is made to putting an end ‘to all primary obligations … remaining unperformed’. But these words were never intended to cover such ‘obligations’ to use Lord Diplock’s word, as arise when primary obligations have been put an end to. There then arise, on his Lordship’s analysis, secondary obligations which include an obligation to pay monetary compensation. Whether these have been modified by agreement is a matter of construction of the contract. The analysis, indeed, so far from supporting the consignee’s argument, is directly opposed to it. Their Lordships are of opinion that, on construction and analysis, clause 17 plainly operates to exclude the consignee’s claim.’
Judges:
Lord Wilbeforce
Citations:
[1981] 1 WLR 138, [1980] 3 All ER 257
Jurisdiction:
Australia
Citing:
Cited – Suisse Atlantique Societe d’Armement Maritime SA v NV Rotterdamsche Kolen Centrale HL 1966
No magic in the words “fundamental breach”
There is no rule of law which prevents parties to a contract agreeing to limit their respective liabilities. It is a question of the construction of the particular clause as to whether it applies to a fundamental breach or not. The court doubted the . .
Cited – 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 . .
Cited – Heyman v Darwins Limited HL 1942
An arbitration clause will survive a repudiatory breach: ‘I agree with the Lord Chancellor in thinking that the true ground of the decision in Jureidini v National British and Irish Millers Insurance Co Ltd was the narrowness of the field of . .
Cited by:
Cited – Super Chem Products Limited v American Life and General Insurance Company Limited and Others PC 12-Jan-2004
PC (Trinidad and Tobago) A fire occurred at premises in which the stock was insured under two policies. Both insurers denied the claims alleging arson, and that it was out of time. The claimant said that the . .
Lists of cited by and citing cases may be incomplete.
Contract, Transport
Updated: 25 November 2022; Ref: scu.193398
