판결 이유
An exclusion clause in a commercial contract between parties of equal bargaining strength can be effective to exclude liability even for a fundamental breach or a deliberate wrongful act by the defendant's employee, provided on a true construction of the contract the clause covers the breach. There is no rule of law that a fundamental breach automatically displaces an exclusion clause; the matter is always one of contractual construction. The House of Lords overruled the Court of Appeal's 'rule of law' approach to fundamental breach adopted in Harbutt's Plasticine v Wayne Tank [1970].
사실관계
Securicor Transport Ltd contracted to provide night patrol services for Photo Production Ltd's factory. The contract contained an exclusion clause that limited Securicor's liability for the acts or defaults of its employees. One of Securicor's employees, a Mr Musgrove, deliberately started a small fire in the factory in order to keep warm, which spread and destroyed the entire factory causing approximately £615,000 of damage. Securicor invoked the exclusion clause to deny liability. Photo Production argued that a deliberate wrongful act by an employee constituted a fundamental breach that the exclusion clause could not cover, relying on the principle stated by the Court of Appeal in Harbutt's Plasticine.
판결 요약
The House of Lords unanimously allowed Securicor's appeal and held that the exclusion clause was effective. Lord Wilberforce, giving the leading speech with which Lords Diplock, Salmon, Keith, and Scarman all agreed, comprehensively rejected the doctrine of fundamental breach as a rule of law. He held that since the Unfair Contract Terms Act 1977 now provided a statutory regime for controlling unreasonable exclusion clauses in consumer contracts, there was no longer any need for the courts to distort the law of contract by treating fundamental breach as automatically negativing exclusions. The correct approach was always one of construction: did the clause, properly interpreted, cover the breach that occurred? On the facts, the parties were commercial entities of equal bargaining power who had freely allocated risk; the exclusion clause was wide enough on its true construction to cover Musgrove's deliberate act. Lord Diplock added that UCTA 1977 rendered the Harbutt's approach both unnecessary and wrong as a matter of common law principle.
주요 인용문
"It is not correct to say that an exclusion clause can never apply to a fundamental breach. The question is always one of construction."
— Lord Wilberforce at 843
"My Lords, the doctrine of 'fundamental breach' in spite of its imperfections was a useful tool in the hands of the judges for controlling unjust exemption clauses. Now that the Unfair Contract Terms Act 1977 is in force, there is no longer any need for it."
— Lord Diplock at 851
"In commercial matters generally, when the parties are not of unequal bargaining power, and when risks are normally borne by insurance, not only is it wrong to distort the law but it is unnecessary to do so."
— Lord Wilberforce at 843
후속 처리
Consistently followed as the definitive authority that exclusion clauses are a matter of construction. Applied in George Mitchell (Chesterhall) Ltd v Finney Lock Seeds [1983] and Ailsa Craig Fishing Co Ltd v Malvern Fishing Co [1983].
Applied in Smith v Eric S Bush [1990] UKHL 1, where the House of Lords distinguished commercial contracts (Photo Production) from residential surveys where the UCTA 1977 reasonableness test applied.
Distinguished in cases where UCTA 1977 applies to business-to-consumer contracts, where the statute rather than the common law principle governs the enforceability of exclusions.
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