Photo Production Ltd. v. Securicor Transport Ltd
| Photo Production Ltd v Securicor Transport Ltd | |
|---|---|
 |
|
| Court | House of Lords |
| Citation(s) | [1980] AC 827, [1980] UKHL 2 |
| Case history | |
| Prior action(s) | [1978] 1 WLR 856 |
| Keywords | |
| Fundamental breach, construction | |
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.
Photo Productions Ltd sued Securicor Transport Ltd after Securicor's employee, Mr Musgrove, started a fire at Photo Production's factory to warm himself while at work and accidentally burnt it down, costing £615,000. 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… unless such act or default could have been foreseen and avoided by the exercise of due diligence on the part of [Securicor]." 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 and invalidated the whole agreement, and extinguished the exclusion clause.
Lord Denning MR held that the doctrine of fundamental breach did apply, and that Securicor was liable. 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. He said the following.
Thus we reach, after long years, the principle which lies behind all our striving: the court will not allow a party to rely on an exemption or limitation clause in circumstances in which it would not be fair or reasonable to allow reliance on it; and, in considering whether it is fair and reasonable, the court will consider whether it was in a standard form, whether there was equality of bargaining power, the nature of the breach, and so forth.
Shaw and Waller LJJ concurred. Securicor appealed.
The House of Lords overturned the Court of Appeal and held that Securicor's exclusion clause was effective and exempt it from liability for damage. Lord Diplock held that the clause’s effectiveness was a question of construction of the contract, and that it did cover the damage. He noted ‘the reports are full of cases in which what would appear to be very strained constructions have been placed upon exclusion clauses’ though the need should have gone since the passage of the Unfair Contract Terms Act 1977.
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