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The Future of the Unfair Contract Terms Act 1977
Published online by Cambridge University Press: 16 January 2009
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A significant and relatively recent academic contribution to the problem of exclusion clauses has been to highlight the relevance of contractual terms to the constructional problems that arise in interpreting individual exclusion clauses. The conventional view, that an exemption clause operates as a shield to a claim for damages or repudiation, has been criticised as a failure to recognise this as simply one device available to the draftsman to enable him to delimit the extent of the obligations undertaken by the agreement: a negative statement of positive obligation. The most persistent advocate of the exclusion clause as a method of modifying primary contractual duties is Professor Coote. Judicial response has, until recently, been disappointing, although there has been more enthusiasm in Australia.
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References
1 Exception Clauses, p. 1 and passim; see also Yates, Exclusion Clauses in Contract, Chap. 4 and passim.
2 Council of the City of Sydney v. West (1965) 114 C.L.R. 481, 495–496Google Scholar, per Kitto J.; Thomas National Transport (Melbourne) Pty. Ltd. v. May & Baker (Australia) Pty. Ltd. (1966) 115 C.L.R. 353, 385–387Google Scholar, per Windeyer J.
3 Cf. Wilson v. Darling Island Stevedoring & Lighterage Co. Ltd. (1956) 95 C.L.R. 43.Google Scholar
4 [1937] 2 K.B. 242, 255, 258; see also Halbauer v. Brighton Corporation [1954] 2 All E.R. 707, 713Google Scholar, per Morris L.J.; Bata v. City Parking Canada Ltd. (1974) 43 D.L.R. (3d) 190Google Scholar, criticised by Palmer, Bailment, p. 210.
5 A further example might be the provision common in many removalists' contracts that the removalist shall not be answerable for goods which are not packed by his employees.
6 Naviera De Canarias S.A. v. Nacional Hispanica Asegouradora S.A. (1976)Google Scholar, The Times, 14 April; reversed by the House of Lords [1977] 1 All E.R. 625. See also Mendelssohn v. Normand Ltd. [1970] 1 Q.B. 177Google Scholar; Sze Hoi Tong Bank Ltd. v. Rambler Cycle Co. Ltd. [1959] A.C. 576Google Scholar; Philip Boshali v. Allied Commercial Exporters Ltd. (1961) Unrep., 14 November (P.C.).Google Scholar
7 [1978] 3 All E.R. 146, 150 et seq.
8 [1967] 2 Lloyd's Rep. 61.
9 Ibid., at p. 67.
10 e.g., Adams v. Richardson & Starling [1969] 1 W.L.R. 1645.Google Scholar
11 Supra, n. 2.
12 [1971] 1 W.L.R. 519, 522.
13 As to the former, see Palmer, op. cit., p. 918; as to the latter, see Yates, op. cit., pp. 77–78.
14 [1976] 2 Lloyd's Rep. 215 (a case of a non–contractual exclusion clause).
15 [1973] 1 W.L.R. 210.
16 Ibid., at p. 230.
17 [1980] 1 All E.R. 556, 564 et seq.
18 [1978] 3 All E.R. 146; noted by Samuel (1979) 95 L.Q.R. 25.
19 Ibid., at pp. 153–154.
20 [1980] 1 All E.R. 556; noted by Sealy (1980) 39 C.L.J. 252.
21 Suisse Allantique Société D'Armement Maritime S.A. v. N.V. Rotterdamsche Kolen Centrale [1967] 1 A.C. 361.Google Scholar
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26 [1971] 1 W.L.R. 519. This analysis attracted some favourable comment: see, for example, Mayfair Photographic Co. Ltd. v. Baxter Hoare & Co. Ltd. [1972] 1 Lloyd's Rep. 410Google Scholar; Gallaher Ltd. v. B.R.S. Ltd. [1974] 2 Lloyd's Rep. 440.Google ScholarCf. the unreported case of Ailsa Craig Fishing Co. Ltd. v. Malvern Fishing Co. Ltd. where Lord Wylie was prepared to leave the question open.
27 [1980] 1 All E.R. 556, 563; Lords Keith of Kinkel and Scarman concurring.
28 [1976] 1 Lloyd's Rep. 14 (C.A.).
29 [1963] 2 Q.B. 683.
30 Palmer, op. cit., pp. 939–940.
31 See especially [1980] 1 All E.R. 556, 563, 565, per Lord Wilberforce and Lord Diplock. The latter's disapproval was expressed generally, in terms of “the … cases [subsequent to Harbutt's ‘Plasticine’] in which the so called ‘rule of law’ was applied to defeat exclusion clauses.” It may be doubted whether Wathes is in fact properly so characterised, although the Court of Appeal was purporting in that case to decide in conformity with Harbutt's “Plasticine.” As noted above, Lord Keith of Kinkel and Lord Scarman expressly concurred in the speech of Lord Wilberforce.
32 [1967] 1 A.C. 361, 398, 419, 425. As Coote observes in [1970] C.L.J. 221, 233, the point had been conceded by counsel.
33 [1974] 2 Lloyd's Rep. 286, 294–295.
34 Handford (1975) 38 M.L.R. 577.
35 This assumes that no other concurrent relation existed which was capable of surviving the contract. The most obvious example is that of bailor and bailee. Cf. Lord Diplock in [1980] 1 All E.R. 556, 567; Port Jackson Stevedoring Pty. Ltd. v. Salmond & Spraggon (Australia) Pty. Ltd. [1980] 3 All E.R. 257Google Scholar, per Lord Wilberforce at p. 262.
36 [1980] 1 AH E.R. 556, 561; see also per Lord Diplock at p. 565 and per Lord Salmon at pp. 569–570.
37 The terminology is that of Lord Diplock at [1980] 1 All E.R. 556, 566–567, but the same notions are expressed by Lord Wilberforce at pp. 561–563. in a speech adopted by Lords Salmon, Keith of Kinkel and Scarman at pp. 569–570.
38 And, one might add, not deprive the agreement of all contractual content or offend the rule against penalties.
39 e.g., Lilley v. Doubleday (1881) 7 Q.B.D. 510; Shaw & Co. Ltd. v. Symmon of & Sons Ltd. [1917] 1 K.B. 799Google Scholar; Mitchell v. Ealing London Borough Council [1978] 2 W.L.R. 999.Google Scholar The doctrine first arose in cases of carriage of goods by sea: see, for instance, Davis v. Garrett (1830) 6 Blng. 716. See also Port Jackson Stevedoring Pty. Ltd. v. Salmond & Spraggon (Australia) Pty. Ltd. [1980] 3 All E.R. 257.Google Scholar
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42 [1936] 2 All E.R. 597, 601. Cf. per Lord Wilberforce at [1980] 1 All E.R. 556, 563.
43 Woolf v. Collis Removal Services [1948] 1 K.B. 11.Google Scholar In Photo Production, Lord Diplock specifically excluded arbitration clauses from his general account of the consequences of repudiatory breach: [1980] 1 All E.R. 556, 566, 567. But the approach adopted by his Lordship seems consonant with the accepted survival of such clauses. See further (and generally) Heyman v. Darwins Ltd. [1942] A.C. 356, upon which the leading speeches heavily relied, andGoogle ScholarPort Jackson Stevedoring Pty. Ltd. v. Salmond & Spraggon (Australia) Pty. Ltd. [1980] 3 All E.R. 257, 262.Google Scholar
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45 As to this, see Lord Diplock at [1980] 1 All E.R. 556, 567.
46 [1980] 3 AH E.R. 257.
47 At p. 262. Lord Wilberforce is incorrect when he states, at p. 260, that the arguments on fundamental breach were not dealt with by the Australian High Court. Barwick C.J. opined that the proper approach was to adopt a careful construction of the provisions in question to ascertain whether they encompassed misdelivery. On such a construction the appellants were exonerated, thus ruling out any application of a substantive doctrine of fundamental breach: (1978) 18 A.L.R. 333, 247–248.
48 If that: see, for instance, Sayers v. Harlow U.D.C. [1958] 1 W.L.R. 623Google Scholar; Artingstoll v. Hewers Garages Ltd. [1973] R.T.R. 197, 201Google Scholar; cf. Lambert v. Lewis [1980] 1 All E.R. 978Google Scholar; Samuel (1979) 95 L.Q.R. 484.
49 Palmer and Davies (1980) 29 I.C.L.Q. 415.
50 Ibid. Although some of these concepts, e.g., causation, tend to produce “all or nothing” solutions which apportionment avoids.
51 See, for example, Harper v. Ashton's Circus Pty. Ltd. [1972] 2 N.S.W.R. 395.Google Scholar
52 See, Yates, op. cit., pp. 118–140.
53 Pinnock Bros. v. Lewis & Peat Ltd. [1923] 1 K.B. 960Google Scholar; Nicol v. Godts (1854) 10 Ex. 191; Smeaton Hanscombe & Co. v. Sassoon I. Selty & Co. [1953] 1 W.L.R. 1468, 1470Google Scholar; Karsales (Harrow) Ltd. v. Wallis [1956] 1 W.L.R. 936Google Scholar, per Birkett L.J. at p. 942 and per Parker L.J. at p. 943; Yeoman Credit Ltd. v. Apps [1962] 2 Q.B. 508Google Scholar, per Holroyd Pearce L.J. at p. 520; Charterhouse Credit Co. v. Tolly [1963] 2 Q.B. 683Google Scholar, per Donovan L.J. at p. 701 and per Upjohn L.J. at p. 710; Suisse Atlantique Sotiété d'Armement Maritime S.A. v. N.V. Rotterdamsche Kolen Centrale [1967] 1 A.C. 361Google Scholar, per Viscount Dil–home at p. 393 and per Lord Reid at pp. 397–398.
54 [1967] 1 A.C. 361, 393, 397.
55 Fibrosa Spolka Akcyjno v. Fairbairn Lawson Combe Harbour Ltd. [1943] A.C. 32,Google Scholarper Viscount Simon L.C. at p. 46.
56 At p. 561.
57 At pp. 561 and 567 respectively.
58 n. 55 supra.
59 It was the respondents' apparent failure to appreciate this point that led to the need for the Privy Council, in Port Jackson Stevedoring Pty. Ltd. v. Salmond & Spraggon (Australia) Pty. Ltd. [1980] 3 All E.R. 257, 262Google Scholar, to emphasise that clause 17 was “directed towards the carrier's obligations as bailee of the goods.”
60 See infra.
61 Cf. the deliberate assault in Keppel Bus Co. Ltd. v. Sa'ad Ahmad [1974] 2 All E.R. 700,Google Scholar and the estate agent's fraud in Sorrell v. Finch [1976] 1 W.L.R. 833.Google Scholar
62 e.g., Adams (Durham) Ltd. v. Trust Houses Ltd. [1960] 1 Lloyd's Rep. 380, 386Google Scholar; Central Motors (Glasgow) Ltd. v. Gessnock Garage & Motor Co., 1925 S.C. 796, 804Google Scholar; B.R.S. Ltd. v. Arthur V. Crutchley Ltd. [1968] 1 All E.R. 810Google Scholar, esp. per Lord Pearson. The matter is discussed fully by Palmer, op. cit., pp. 475–489.
63 Observe the closely analogous approach taken in Riverstone Meat Co. Pty. Ltd. v. Lancashire Shipping Co. Ltd. [1961] A.C. 807Google Scholar, esp. per Lord Keith of Avonholm.
64 We submit that this analysis is supported by the judgment of Lord Denning M.R. in Morris v. C.W. Martin & Sons Ltd. [1966] 1 Q.B. 716Google Scholar, where the course of employment theory (and, with it, the application of conventional vicarious liability) are rejected in favour of an examination of the duty undertaken by the primary contractor. Although the decision involved a non-contractual bailment, it is submitted that liability there is best seen as arising from an implied term in the consent-based relation between bailor and sub-bailee.
65 See the citation of MacKenna J.'s judgment in Ailsa Craig Fishing Co. Ltd. v. Malvern Fishing Co. Ltd. (1978)Google Scholar (unreported).
66 [1978] 3 All E.R. 146, 150, 155, 156–157, per Lord Denning M.R. and Shaw and Waller L.JJ., respectively.
67 [1966] 1 Q.B. 716 (which stresses the duty assumed). There is little practical difference between this and the ostensibly more conventional approach adopted in Morris by Diplock and Salmon L.JJ., because of the heavy qualifications imposed by the learned Lords Justices as to the sort of servant for whom the contractor would be answerable.
68 [1980] 1 All E.R. 556, 564.
69 Ibid., (emphasis supplied).
70 Ibid., at p. 562.
71 [1973] 1 W.L.R. 210, cited at [1980] 1 All E.R. 556, 562. See ante, n. 15.
72 [1980] 1 All E.R. 556, 570.
73 Ibid., at p. 569.
74 Ibid., at p. 569.
75 Ibid., at p. 564.
76 Ibid., at pp. 565–566.
77 Ibid., at p. 568.
78 Ibid., at p. 561.
79 Coote (1978) 41 M.L.R. 312.
80 Anglo-Continental Holidays Ltd. v. Typaldos Lines (London) Ltd. [1967] 2 Lloyd's Rep. 61.Google Scholar
81 Second Report on Exemption Clauses, pp. 55–57.
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84 e.g., in the Gillespie case (supra) at p. 416; in the Photo Production case [1978] 3 All E.R. 146, 151–152, 153Google Scholar and in Levison v. Patent Steam Carpet Cleaning Co. Ltd. [1978] Q.B. 69.Google Scholar
85 Cf. the facts of Smith v. South Wales Switchgear Ltd. [1978] 1 All E.R. 18.Google Scholar
86 [1975] Q.B. 303; noted (1974) 25 N.I.L.Q. 338.
87 s. 2 (1).
88 ss. 2 (2), 3.
89 s. 1 (1) (a) to (c).
90 As to which, see Liverpool City Council v. Irwia [1977] A.C. 239.Google Scholar
91 Occupiers Liability Act, s. 2 (1).
92 Sale of Goods Act 1979, s. 14 (2) (a). Cf. the situation in Gloucestershire County Council v. Richardson [1969] 1 A.C. 480Google Scholar, and the problem discussed by Atiyah, Sale of Goods (5th edn.), pp. 82–83. The “exclusion” of the duty may often occur in circumstances which operate equally to the advantage of the proferee.
93 Cf. Hedley Byrne & Co. Ltd. v. Heller Partners Ltd. [1964] 1 A.C. 465Google Scholar (esp. per Lord Devlin) with Ministry of Housing and Local Government v. Sharp [1970] 1 All E.R. 1009Google Scholar, per Lord Denning M.R.
94 Coote, loc. cit., esp. at p. 318.
95 An example, it is submitted, would be Bata v. City Parking Canada Ltd. (1974) 43 D.L.R. (3d) 190.Google Scholar
96 Cf. the rather more robust approach suggested by Adams (1978) 41 M.L.R. 703.
97 This seems to have been the legal function of the furrier in Morris v. C. W. Martin & Sons Ltd. [1966] 1 Q.B. 716.Google Scholar See generally Palmer, op. cit., pp. 829 et seq.
98 Palmer (1978) 128 N.L.J. 915.
99 [1966] 1 Q.B. 716.
1 [1976] 2 Lloyd's Rep. 215. For a full discussion of these authorities, see Palmer, op. cit., pp. 1000 et seq.
2 Cf. Fosbroke-Hobbes v. Airwork Lid. [1937] 1 All E.R. 108Google Scholar; Pyrene Co. Ltd. v. Scindia Navigation Co. Ltd. [1954] 2 Q.B. 402Google Scholar; Hollingworth v. Southern Ferries Ltd. [1977] 2 Lloyd's Rep. 70Google Scholar; Yates, op. cit., pp. 113 et seq.
3 s. 2 (3) is irrelevant in this context.
4 [1976] 2 Lloyd's Rep. 215.
5 Cf. Deyong v. Shenburn [1946] K.B. 227Google Scholar; Edwards v. West Herts Group Hospital Management Committee [1957] 1 All E.R. 541.Google Scholar
6 Johnson Matthey Ltd. v. Constantine Terminals Ltd. [1976] 2 Lloyd's Rep. 215.Google Scholar These arguments were not pressed by the stevedores in Port Jackson Stevedoring Pty. Ltd. v. Salmond & Spraggon (Australia) Pty. Ltd. [1980] 3 All E.R. 257Google Scholar, perhaps because the Contractual aspect of the relationship, due to the suggested absence of consideration, was unclear.
7 Cf. Mendolssohn v. Normand Ltd. [1970] 1 Q.B. 177Google Scholar; Overbrooke Estates Ltd. v. Glencombe Properties Ltd. [1974] 1 W.L.R. 1335.Google Scholar
8 It is not here suggested that a garage owner who allows a car to be parked in his garage necessarily becomes a bailee but he may well do when some action or consent on his part is necessary to release the Vehicle, e.g., by raising a security barrier or unlocking a door.
9 See Palmer (1978) 128 N.L.J. 915, 916, where these arguments were first advanced.
10 A glimmer of the possible operation of fundamental breach in this context can be found in Thomas National Transport (Melbourne) Pty. Ltd. v. May & Baker (Australia) Pty. Ltd. (1966) 115 C.L.R. 353.Google Scholar It is discussed in depth by Palmer, op. cit., pp. 824–826.