Shaw and Waller LJJ concurred. Lord WilberforceLord DiplockLord SalmonLord Keith of KinkelLord Scarman. change. The judge's finding was in these words:—. That there was any rule of law by which exceptions clauses areeliminated, or deprived of effect, regardless of their terms, was clearly not theview of Viscount Dilhorne, Lord Hodson, or of myself. the plaintiffs' factory: that, and the efficacy of their fire precautions, would beknown to the plaintiffs. The contract with which this appeal is concerned is a very simple commercialcontract entered into by two highly experienced business enterprises—theappellants whom I shall call Securicor and the respondents whom I shall callPhoto Productions. It would have no knowledge of the value of. Upon his doing so the contract comes to an end. I am content to leave the matter there with some supplementary observa-tions. My Lords, I would accordingly allow the appeal. 2. I would, therefore, allowthe appeal. Among the latter he includes an obligationto pay compensation, i.e., damages. It would be enough toput that upon its radical inconsistency with the Suisse Atlantique. My Lords, the contract in the instant case was entered into before the passingof the Unfair Contract Terms Act 1977. So what we are concerned with is thecommon law of contract—of which the subject-matter is the legally enforceableobligations as between the parties to it of which the contract is the source. It seems that the current law governing the exemption clauses is as expressed by the House of Lords in Photo Production Limited Vs Securicor Transport Ltd [1980] 1 ALL ER 556 and in George Mitchell (Chester Hall) Ltd (supra)” 18. I have, indeed, been unableto understand how the doctrine can be reconciled with the well accepted prin-ciple of law, stated by the highest modern authority, that when in the context ofa breach of contract one speaks of "termination", what is meant is no more thanthat the innocent party or, in some cases, both parties, are excused fromfurther performance. This disaster occurred when Musgrovewas visiting the factory on patrol one Sunday night and deliberately threw alighted match on some cartons lying on the floor of one of the rooms he wasinspecting. Case summary Photo Production Ltd v Securicor Transport Ltd [1980] AC 827 Due diligence, negligence and exclusion clauses in contracts Facts Photo Production Ltd and Securicor had a contract for the provision of security services by the latter to the former. It is significant thatParliament refrained from legislating over the whole field of contract. Either party can insure against it. . Photo Production Ltd v Securicor Transport Ltd [1980] AC 827, HL, p 839 Lord Wilberforce: My Lords, this appeal arises from the destruction by fire of the respondents’ factory involving loss and damage agreed to amount to £615,000. 's approach to the doctrine of fundamental breach. Photo Production Ltd v Securicor Transport Ltd [1980] ACWhat were the legal issues to be decided?what was Lord Wilberforce’s reasons for reversing the Court of Appeal’s decision and ruling for the defendants on those legal issues. 716, 739.This being the breach, does condition 1 apply? In summary, where a party fails to comply with a contractual term which goes to the heart of the contract, the injured party can either: The Court of Appeal was, I think, bound so to hold by previous decisions ofits own, of which the first was Harbutt's Plasticine v. Wayne Tank Co. [1970] 1Q.B. But even the superficial logic of the reasoning is shattered when it isapplied, as it was in Wathes (Western) Ltd. v. Austins (Menswear) Ltd. [1976]1 Lloyd's Rep. 14, to cases where, despite the "fundamental breach", the partynot in default elects to maintain the contract in being. view, wrong to place a strained construction upon words in an exclusion clausewhich are clear and fairly susceptible of one meaning only even after dueallowance has been made for the presumption in favour of the implied primaryand secondary obligations. So what we are concerned with is thecommon law of contract—of which the subject-matter is the legally enforceableobligations as between the parties to it of which the contract is the source. Thissecondary obligation is additional to the general secondary obligation; I willcall it "the anticipatory secondary obligation". Lord Reid comments as to this that he could not deduce from the authoritiescited in Karsales that the proposition stated in the judgments could be regardedas in any way "settled law" (p.401). The Suisse Atlantique case in his view"affirms the long line of cases in this court that when one party has been guilty"of a fundamental breach of the contract . (liability limited in extent and amount) and the case of Photo Production Ltd. v Securior Transport Ltd. (1980) 1 ALL E.R. The duty of Securicor was, as stated, to provide a service. ([1942]A.C.356, 399). This does not come into operation untila party to the contract claims that a primary obligation of the other party hasnot been performed; and its relationship to other obligations of which thecontract is the source was dealt with by this House in Heyman v. Darwins Ltd.[1942] A.C. 356. But whatcan and ought to be avoided is to make use of these confusions in order toproduce a concealed and unreasoned legal innovation: to pass, for example,from saying that a party, victim of a breach of contract, is entitled to refusefurther performance, to saying that he may treat the contract as at an end, oras rescinded, and to draw from this the proposition, which is not analyticalbut one of policy, that all or (arbitrarily) some of the clauses of the contractlose, automatically, their force, regardless of intention. PHOTO PRODUCTION LIMITED (RESPONDENTS) v. SECURICOR TRANSPORT LIMITED (APPELLANTS) Lord WilberforceLord DiplockLord SalmonLord Keith of KinkelLord Scarman. In 1968 itentered into a contract with the respondents by which for a charge of £8,15,0d. In such a case the injured party may accept the renunciation as"a breach going to the root of the whole of the consideration. The contract between the two parties provided that Securicor should supply apatrol service at Photo Productions' factory by four visits a night for sevennights a week and two visits every Saturday afternoon and four day visits everySunday. Lord Reid referred to these in the SuisseAtlantique (p.406), pointing out at the same time that the doctrine of fundamentalbreach was a dubious specific. I agree with the speech of my noble and learned friend Lord Wilberforce,which I have had the advantage of reading in draft and to which I cannotusefully add anything. 716. In my opinion they can and should. The case is remembered for these principal reasons: White and Carter (Councils) Ltd v McGregor. 69) in the light ofwell known principles such as that stated in Alderslade v. Hendon LaundryLtd. Photo Production v. Securicor Transport Ltd. - Lord Wilberforce, Lord Diplock, Lord Salmon, Lord Keith of Kinkel and Lord Scarman - H.L. Photo Production Ltd v Securicor Transport Ltd [1980] UKHL 2 is an English contract law case decided by the House of Lords on construction of a contract and the doctrine of fundamental breach. Thesecondary obligation on the part of the contract breaker to which it gives riseby implication of the common law is to pay monetary compensation to theother party for the loss sustained by him in consequence of the breach; but,with two exceptions, the primary obligations of both parties so far as they havenot yet been fully performed remain unchanged. (Harbutt's case [1970] 1 Q.B. The"rule of law" theory which the Court of Appeal has adopted in the last decadeto defeat exclusion clauses is at first sight attractive in the simplicity of its logic.A fundamental breach is one which entitles the party not in default to elect toterminate the contract. 3—"That"the question whether an exceptions clause was applicable where there was a"fundamental breach of contract was one of the true construction of the"contract". The contract provided that for this service, Securicor should be paid£8.15 a week. Any persons capable of making a contract are free to enter into any contractthey may choose: and providing the contract is not illegal or voidable, it isbinding upon them. 189. Many difficult questions arise and will continueto arise in the infinitely varied situations in which contracts come to be breached—by repudiatory breaches, accepted or not, anticipatory breaches, by breachesof conditions or of various terms and whether by negligent, or deliberate actionor otherwise. The respondents in factrelied upon them for an argument that since they exempted from negligencethey must be taken as not exempting from the consequence of deliberate acts.But this is a perversion of the rule that if a clause can cover something otherthan negligence, it will not be applied to negligence. The HOL later ruled that the clause protected Securicor from the fundamental breach. ?as, "ceased to exist may in individual cases convey the truth with s????? Photo Production Ltd v Securicor Transport Ltd House of Lords. . A night-watchman, Mr Musgrove, started a fire in a brazier at Photo Production's factory to keep himself warm. Photo Production Ltd. v. Securicor Transport Ltd., [1980] AC 827 • clause was unambiguous. The Master of the Rolls in this was following the earlier decision of theCourt of Appeal, and in particular his own judgment in Harbutt's "Plasticine"Ltd. v. Wayne Tank & Pump Co. Ltd. 2. They do not avail him when he is guilty of a breach which"goes to the root of the contract". In cases falling within the second exception, breachof condition, the anticipatory secondary obligation generally arises underparticular kinds of contracts by implication of statute law; though in the caseof "deviation" from the contract voyage under a contract of carriage of goodsby sea it arises by implication of the common law. My Lords, in the light of this, the passage cited by the Master of the Rollshas to be considered. We are not concerned with the Unfair Contract Terms Act 1977 since thepresent contract was entered into before that Act was passed. 101 (liability limited in amount); George Mitchell (Chesterilall) Ltd. v Finney Lock Seeds Ltd. (1983) 2 ALL E.R. On thispart of the case I agree with the judge and adopt his reasons for judgment. I have had the advantage of reading in draft the speech delivered by my nobleand learned friend Lord Wilberforce. The appellant is a company which provides security services. - Feb. 14, 1980 Contract - Fundamental breach - Effect on exception clause This appeal arose out of the destruction by fire of the respondent’s factory. The fallacy in the reasoning and what I venture to think is the disarray intowhich the common law about breaches of contract has fallen, is due to the usein many of the leading judgments on this subject of ambiguous or impreciseexpressions without defining the sense in which they are used. Securicor argued that an exclusion clause in its contract meant they were not liable, as it said "under no circumstances be responsible for any injurious act or default by any employee . The fire spread accidentally[1] and the Photo Productions plant was totally destroyed by fire, causing £648,000-worth of damage. The cost to Photo Productions for the benefit of thepatrol service provided by Securicor was very modest and probably substantiallyless than the reduction of the insurance premiums which Photo Productionsmay have enjoyed as a result of obtaining that service. The contract which falls to be consideredwas a contract for the rendering of services by the defendants ("Securicor") tothe plaintiffs ("the Factory Owners"). Facts. Securicor undertook to provide a serviceof periodical visits for a very modest charge which works out at 26p per visit. 339, 361 per Bowen L.J. . Lord Diplock held that the clause’s effectiveness was a question of construction of the contract, and that it did cover the damage. It was a contract of indefinite durationterminable by one month's notice on either side. Photo Productions Ltd engaged Securicor to guard their premises at night. He visited the factory at thecorrect time, but when inside he deliberately started a fire by throwing a matchon to some cartons. unless such act or default could have been foreseen and avoided by the exercise of due diligence on the part of [Securicor]." [2] He said if the breach was fundamental then the exclusion clause would be invalid, following his decision in Harbutt's "Plasticine" Ltd v Wayne Tank and Pump Co Ltd.[3] He said the following.[4]. The facts relevant to this case are very short. What, for example, would have been the position of the respon-dents' factory if instead of being destroyed it had been damaged, slightly ormoderately or severely? His sfltate of mind was never made clear.5 The fire spread and the factory burnt down. contains alphabet), Photo Production Ltd v Securicor Transport Ltd. Creating your profile on CaseMine allows you to build your network with fellow lawyers and prospective clients. The Lords Justices substantially followed him in this argument. Photo Productions argued that the clause could not apply under the doctrine of fundamental breach, that the breach of the contract went to the root of the contract, it invalidated the whole agreement and extinguished the exclusion clause. It is with the utmost reluctance that, not forgetting the "beams" that mayexist elsewhere, I have to detect here a note of ambiguity or perhaps even ofinconsistency. Musgrove, an employee of Securicor, started a fire at Photo Production's factory to warm himself while at work and accidentally burnt it down, costing £615,000. Photo Production Ltd v Securicor Transport Ltd (1980) – The Court of Appeal held that the exemption clause was invalid because the breach was fundamental. Photo Production Ltd v Securicor Transport Ltd [1980] AC 827. Interact directly with CaseMine users looking for advocates in your area of specialization. APPELLANT: Securicor Transport Ltd. RESPONDENT: Photo Production Ltd. A vast number of expressions are used to describe situationswhere a breach has been committed by one party of such a character as toentitle the other party to refuse further performance: discharge, rescission,termination, the contract is at an end, or dead, or displaced; clauses cannotsurvive, or simply go. In that case Lord Denning M.R. 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 from or limitation of liability for a breach, nevertheless the court will not give the party that 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”; and 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 Fareham Urban District Council [1956] AC 696, 728–729. Itdid not agree to provide equipment. No-one has suggested that Securicor could have foreseen or avoided by duediligence the act or default which caused the damage or that Securicor had beennegligent in employing or supervising Musgrove. All these difficulties arise from the doctrine andare left unsolved by it. For Iam convinced that, with the possible exception of Lord Upjohn whose criticalpassage, when read in full, is somewhat ambiguous, their Lordships, fairlyread, can only be taken to have rejected those suggestions for a rule of lawwhich had appeared in the Court of Appeal and to have firmly stated thatthe question is one of construction, not merely of course of the exclusion clausealone, but of the whole contract. The main purpose of the patrol was to avoid fire and theft. My Lords, the reports are full of cases in which what would appear to be verystrained constructions have been placed upon exclusion clauses, mainly in whatto-day would be called consumer contracts and contracts of adhesion. per Denning L.J. That primary obligation is modified by the exclusion clause.Securicor's obligation to do this is not to be absolute, but is limited to exercisingdue diligence in its capacity as employer of the natural persons by whom thevisits are conducted, to procure that those persons shall exercise reasonableskill and care for the safety of the factory. The cases linked on your profile facilitate Casemine's artificial intelligence engine in recommending you to potential clients who might be interested in availing your services for similar matters. of the litigation in Photo Production Ltd. v. Securicor Transport Ltd.4 The facts were as follows. Such as that stated in Alderslade v. Hendon LaundryLtd Lord Scarman there was any such rule of law see Boston. Speeches of their Lordships, are correctly summarised in the instant case was entered into before that Act as result. Diplocklord SalmonLord Keith of Kinkel, Lord Salmon, Lord Diplock, Lord Diplock, Salmon... 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