OCR A2 Law - The Law of Contract - Exclusion Clauses (5)

The Doctrine of Fundamental Breach: N.B. This is only needed for an essay on exemption clauses and not a problem question. Lord Denning became fed up with lawyers creating judge proof clauses developed a 3rd way to avoid exclusion clauses. This was true Doctrine of Fundamental Breach. He stated that if there was a serious breach of contract, then no exclusion clause will be valid. Developed in ----> CASE: "Karsales v Wallis". In this case a purchaser bought a second hand car after inspecting the vehicle. When it was delivered the cylinder head gasket had been removed etc. The company sued for payment relying on a tightly worded exclusion clause saying that no warranty was given as to the condition or fitness of the vehicle. HELD: The garage company couldn't rely on the exclusion clause as there was a very serious fundamental breach (FB) of contract and ... no exclusion clause could be valid and cover this fb. BUT... HofL dissaproved of this in "Suisse Atlantique". In this case the Lords said obiter that F.B. was against freedom of contract. Denning ignores this in the CASE: of "Harbutt v Wayne". In this case Denning said the statements made by the HofL in the Suisse Atlantique case were 'indegistable'. He repeated his views of FB as the ratio of the case. Eventually FB was abolished in "Photo Production v Secuicor". In this case a security guard accidentally set fire to the entire factory. There was a clause stated that there was no liability for 'unseen events'. The CofA stated this was FB however the Lords overruled this. Lord Wilberforce stated if 2 parties are of equal bargaining strengths, and free negotiations take place then any clause will be valid ... Securicor coudl rely on their clause.Lords questioned again in ---> CASE: "Aisla Craig Fishing v Securicor". In the case the security guard was negligent for the boats sinking. HELD: The limitation clause was valid. AO2: F.B. is now abolished but was one way in which judges went to great lengths to protect the consumer.