95:
938:
replaced by old ones, body parts were missing, and the engine's cylinder head was detached, revealing burnt valves. This was a serious breach, but the dealer sought to rely on a clause in the contract which read "No condition or warranty that the vehicle is roadworthy or as to its age, condition or fitness for any purpose is given by the owner or implied herein."
1087:(2009), Moss J ruled that a court "would expect to see 'clear' language in the sense of 'strong' language" before accepting that a contract exempted one of the parties from the consequences of a repudiatory breach. In that particular case he concluded that the wording did not extend to the deliberate personal repudiatory breach which the defendant had exhibited.
956:
soon became the leading case on "fundamental breach". As a matter of law, under the doctrine of fundamental breach of contract, exclusion clauses were deemed not to be available to a party in fundamental breach of the contract. However, all was not well, as business people felt alarmed that an agreed
1009:
had overstated the law, and that whether or not a fundamental breach extinguishes any protection that the defendant might rely on was a "question of construction" and not a "question of law". Although the demurrage clause was so absurdly low that it amounted to an exemption clause, nevertheless its
999:
of $ 1,000 per day. The charterers caused huge delays and few round trips were made. Demurrage totalled only $ 150,000, so the owners claimed damages for their full losses, saying they should not be limited to the demurrage terms because the charterer's gross delays amounted to fundamental breach.
965:
the contract and claim damages. However, since both common law and statute already recognised that while that breach of warranty entitled a claimant only to damages, any breach of condition would entitle a claimant to both repudiation and damages, it seemed that fundamental breach offered nothing
937:
a buyer inspected a car dealer's used Buick car and agreed to buy it. The car was later delivered at night, and had been towed. When the buyer inspected the car in the morning, it would not work and it was clear it had been involved in an accident, and there were other changes: its tyres had been
886:
deviated from the agreed route, by heading first to
Burriana (near Valencia). This deviation caused delay and deterioration of the perishable cargo. The carrier relied on a 'liberty clause' in the bill of lading which purported to allow the vessel 'liberty to visit any port in any order'. In the
1146:
in 2010. In its place, the court has created a three-step test to evaluate the application of exclusion clauses. The first step is to evaluate the exclusion clause in the factual context of each case to determine if it applies to the material circumstances. The second step is to evaluate if the
819:
Tindal C.J. stated that a carrier's deviation from the agreed voyage route amounted also to a deviation from the terms of the contract, including its exceptions or limitation clauses provided by such a contract. This view was adopted in the leading cases of
1123:
noted that in that case the repudiatory breach was the personal action of the company's president and "controlling mind", but warned that legal interpretation might differ in a case where the decision to repudiate was the collective decision of a
979:
67:
1075:
57:
limiting the defendant's liability would automatically become void and ineffective. Also, whereas breach of condition gives the plaintiff the option to repudiate, fundamental breach automatically discharges the entire contract.
1098:
still holds, so that not only may deviating carriers be denied the protection of exemption clauses expressly in the contract, they will also be denied the protection of implicit exemptions such as
Article IV of the
960:
Also, there arose some confusion as to what "fundamental breach" actually was. Some alleged it was a breach that went to "the root of the contract", a breach so fundamental it would permit the distressed party to
1142:
899:
356:
921:
1264:
1023:
1147:
exclusion clause was unconscionable at the time of incorporation. The final step is to evaluate whether the exclusion clause should not be enforced on public policy grounds.
1301:
1504:
361:
1251:
949:
and using its "main purpose" concept, the court held that the dealer was "in breach of a fundamental obligation" and so could not rely on any exclusion clause.
53:
is a serious breach that "denies the plaintiff the main benefit of the contract", fundamental breach was supposed to be even worse, with the result that any
629:
1360:
734:
3 Historically restricted in common law jurisdictions but generally accepted elsewhere; availability varies between contemporary common law jurisdictions
1051:" approach whereby a fundamental breach is determined by examining the full circumstances, such as the parties' intentions at the time of the contract.
575:
624:
1029:
749:
316:
1069:
More recently, this law was successfully applied in two cases related to carriage of goods by sea and application of limitation clauses under the
1498:
1284:
1532:
Tercon
Contractors Ltd. v. Her Majesty The Queen in Right of the Province of British Columbia, by her Ministry of Transportation and Highways
891:
in disguise, adding "the main object of this bill of lading is the carriage of oranges from Malaga to
Liverpool". He thus established the
1010:
existence plainly showed that the parties had contemplated the possibility of delay, so delays would not amount to fundamental breach.
563:
62:
43:
1579:
1555:
794:
75:
and Canada. The relevant concept in
English Law, where a fundamental aspect of a contract is breached, is repudiatory breach.
945:
declared that a "car" was a "vehicle capable of self-propulsion", and accordingly this Buick was not a proper car. Following
767:
1558:
995:(the allowable period for the charterer to arrange loading and unloading) were exceeded, the charterers were to pay
930:
863:
was conclusive, and that the deviation was actionable, preventing the carrier from invoking the protection of the "
380:
344:
864:
1313:
1063:
1043:
1005:
373:
1364:
61:
Although the concept caused some excitement in the 1950s and 1960s, the concept was regarded as flawed by the
1179:
911:
Although the 19th century cases were maritime cases, the idea of the "main purpose" caught on in the general
1336:
639:
229:
50:
124:
1421:
787:
659:
385:
738:
1519:
Internet
Broadcasting Corporation Ltd. (T/a Nettv) & Anor v Mar LLC (T/a Marhedge) EWHC 844 (Ch)
1094:
case has taken the sting out of the fundamental breach idea, in deviation itself little has changed.
634:
593:
505:
1217:
962:
895:, holding that no exclusion clause would be allowed to cut into the main purpose of any contract.
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154:
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Exemption clauses need strong words to survive deliberate, fundamental breaches, says High Court
339:
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224:
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182:
1574:
984:
780:
756:
619:
187:
71:
case substantially curtailed the doctrine, which has now been effectively "laid to rest" in
1482:
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912:
855:. The court held that even though the shipper may have known of the planned deviation, the
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334:
213:
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572:(also implied covenant of good faith and fair dealing or duty to negotiate in good faith)
8:
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403:
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1162:
1125:
980:
Suisse
Atlantique Societe d'Armement Maritime S.A. v. N.V. Rotterdamsche Kolen Centrale
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766:, and Canadian jurisprudence in both Québec and the common law provinces pertaining to
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In other words, fundamental breach was not some kind of "super breach of condition".
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contract term could be set aside by a court; there seemed to be no "certainty".
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925:(1945), labelled the fundamental term as âthe hard core of the contract'.
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129:
35:
1534:, 2010 SCC 4, para. 81, published 12 February 2010, accessed 26 April 2021
1143:
Tercon
Contractors Ltd. v. British Columbia (Transportation and Highways)
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446:
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268:
72:
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1157:
Maxine
Footwear Company Ltd. v. Canadian Government Merchant Marine Ltd
1104:
1085:
Internet
Broadcasting Corporation Ltd. t/a NETTV v MAR LLC t/a Marhedge
887:
House of Lords, Lord Herschell LC declared the liberty clause to be an
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27:
1388:, 1936) 55 Ll.L.Rep. 159], Lloyds Law Reports, accessed 26 April 2021
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94:
977:
The matter came to a head in 1966 in the House of Lords decision in
523:
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The doctrine of fundamental breach has been âlaid to restâ by the
1021:
patently ignored the House of Lords' findings. One such case was
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879:
840:
1062:) thus formed the definitive statement of the law up to the
1027:. The House of Lords was less than amused, and in the 1980
679:
669:
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case they emphatically reaffirmed their decision in the
759:
both in Québec and in the country's common law provinces
1265:
Harbutt's "Plasticine" Ltd v Wayne Tank and Pump Co Ltd
1076:
Daewoo Heavy Industries Ltd. v. Klipriver Shipping Ltd.
1024:
Harbutt's "Plasticine" Ltd v Wayne Tank and Pump Co Ltd
42:
from 1962 to 1982, but it did not find favour with the
903:
was a further deviation case following this approach.
1119:"), this may change in due course. One commentary on
1041:
effectively overturned the "rule of law" doctrine of
969:
941:
Although the clause was clear and well drafted, the
762:
7 Specific to civil law jurisdictions, the American
78:
1521:, delivered 24 April 2009, accessed 28 October 2023
907:Adoption of fundamental breach within contract law
576:Contract A and Contract B in Canadian contract law
952:This decision was clearly fair to the buyer, and
811:may be traced to early cases on the doctrine of
1566:
1304:, published 6 May 2009, accessed 28 October 2023
1017:decision, there was a series of cases where the
731:2 Specific to civil and mixed law jurisdictions
34:. The doctrine was, in particular, nurtured by
1285:Photo Production Ltd v Securicor Transport Ltd
1252:Hong Kong Fir Shipping v Kawasaki Kisen Kaisha
788:
768:contractual and pre-contractual negotiation
1296:
1294:
1292:
991:dependent on tonnage of cargo carried. If
987:to export coal, the shipowners to be paid
795:
781:
1103:. However, given the general move in the
16:Concept within the common law of contract
1386:Tate & Lyle v Hain Steamship Company
900:Tate & Lyle v Hain Steamship Company
839:, a vessel bound from Fiume (modern day
26:, is a controversial concept within the
1289:
807:The origins of the idea of fundamental
1567:
859:meant that the route described in the
564:Duty of honest contractual performance
752:of International Commercial Contracts
1003:The House of Lords boldly held that
1543:S.C.R. 801: Canadian Supreme Court
741:and other civil codes based on the
13:
14:
1591:
1047:and instead maintained a strict "
922:Alderslade v. Hendon Laundry Ltd.
79:Background â the law of deviation
566:(or doctrine of abuse of rights)
381:Enforcement of foreign judgments
345:Hague Choice of Court Convention
93:
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1361:"Glynn v Margetson case report"
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983:. The case involved a two-year
1580:Legal doctrines and principles
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1064:Unfair Contract Terms Act 1977
374:Singapore Mediation Convention
1:
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1180:Terms in English contract law
748:5 Explicitly rejected by the
515:Quasi-contractual obligations
1314:Davis v. Garrett case report
851:, sinking in a storm in the
7:
1150:
10:
1596:
1422:The Sale of Goods Act 1893
386:Hague Judgments Convention
1530:Supreme Court of Canada,
1505:McFadden v Blue Star Line
1452:The Kapitan Petko Voivoda
1176:or basic principle of law
1131:
737:4 Specific to the German
1337:Leduc v Ward case report
1218:Consumer Rights Act 2015
1185:
442:Anticipatory repudiation
192:unequal bargaining power
65:, whose decision in the
1138:Supreme Court of Canada
847:headed instead towards
764:Uniform Commercial Code
739:BĂŒrgerliches Gesetzbuch
424:Third-party beneficiary
396:Rights of third parties
274:Accord and satisfaction
495:Liquidated, stipulated
340:Forum selection clause
225:Frustration of purpose
1502:(1885) 10 PD 103 and
1238:Sometimes known as a
1216:Since amended by the
1054:These two cases (the
1044:Karsales Ltd v Wallis
1006:Karsales Ltd v Wallis
757:Canadian contract law
125:Abstraction principle
1483:Donoghue v Stevenson
1049:rule of construction
874:, a vessel carrying
586:Related areas of law
485:Specific performance
335:Choice of law clause
300:Contract of adhesion
214:Culpa in contrahendo
120:Meeting of the minds
115:Offer and acceptance
1463:2 Lloyd's Rep. 357.
1169:Pacta sunt servanda
893:"main purpose rule"
857:parol evidence rule
750:UNIDROIT Principles
524:Promissory estoppel
404:Privity of contract
357:New York Convention
317:UNIDROIT Principles
160:Collateral contract
155:Implication-in-fact
140:Invitation to treat
40:Master of the Rolls
1432:1 Lloyd's Rep. 529
1275:1 Lloyd's Rep. 529
1240:repudiatory breach
1163:Breach of contract
1126:board of directors
1111:to a standard of "
931:Karsales v Wallis
915:after Lord Greene
570:Duty of good faith
467:Fundamental breach
433:Breach of contract
362:UNCITRAL Model Law
326:Dispute resolution
311:Contra proferentem
305:Integration clause
279:Exculpatory clause
49:Whereas breach of
20:Fundamental breach
1397:KB, 189 at p. 193
1348:Glynn v Margetson
1327:(1888) 20 QBD 475
1207:i.e not automatic
1101:Hague-Visby Rules
1096:Glynn v Margetson
1092:Suisse Atlantique
1071:Hague-Visby Rules
1060:Photo Productions
1056:Suisse Atlantique
1035:Suisse Atlantique
1030:Photo Productions
1015:Suisse Atlantique
972:Suisse Atlantique
970:Resolution â the
954:Karsales v Wallis
947:Glynn v Margetson
872:Glynn v Margetson
865:perils of the sea
829:Glynn v Margetson
805:
804:
648:England and Wales
556:Duties of parties
547:Negotiorum gestio
536:Unjust enrichment
257:Statute of frauds
206:Unconscionability
178:Misrepresentation
135:Mirror image rule
68:Suisse Atlantique
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1367:on 2018-04-07
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1575:Contract law
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1393:
1380:
1369:. Retrieved
1365:the original
1355:
1347:
1343:
1332:
1325:Leduc v Ward
1324:
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1234:
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985:time charter
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910:
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871:
869:
837:Leduc v Ward
836:
834:
827:
826:(1888) and
823:Leduc v Ward
821:
816:
806:
703:Criminal law
685:Property law
640:Saudi Arabia
545:
528:
466:
309:
261:
212:
130:Posting rule
87:Contract law
66:
60:
48:
36:Lord Denning
19:
18:
541:Restitution
352:Arbitration
1569:Categories
1554:A.C. 589:
1517:Moss, G.,
1477:Re Polemis
1371:2018-04-06
1227:References
1107:away from
1105:common law
1013:After the
935:EWCA Civ 4
743:pandectist
726:common law
506:Rescission
414:Delegation
409:Assignment
197:Illegality
145:Firm offer
28:common law
997:demurrage
963:repudiate
884:Liverpool
813:deviation
745:tradition
615:Australia
462:Deviation
369:Mediation
102:Formation
63:Law Lords
51:condition
1508:1 KB 697
1441:1 QB 447
1151:See also
1121:Marhedge
832:(1893).
708:Evidence
680:Tort law
653:Scotland
476:Remedies
419:Novation
242:Hardship
169:Defences
110:Capacity
32:contract
24:contract
1174:brocard
1115:" (or "
993:laytime
989:freight
849:Glasgow
845:Dunkirk
698:estates
630:Ireland
247:Set-off
188:Threats
183:Mistake
73:England
1450:Also,
1411:(1876)
1384:iLaw,
1254:, 1961
1159:(1957)
1132:Canada
880:Malaga
841:Rijeka
809:breach
696:, and
694:trusts
668:Other
620:Canada
1420:e.g.
1186:Notes
1083:. In
966:new.
919:, in
878:from
843:) to
815:. In
716:Notes
690:Wills
672:areas
635:India
497:, or
447:Cover
1480:and
1172:, a
1079:and
1058:and
199:and
190:and
1495:viz
1473:viz
1140:in
928:In
882:to
835:In
670:law
30:of
22:of
1571::
1291:^
1128:.
1073::
1066:.
1037:.
917:MR
692:,
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38:,
1374:.
796:e
789:t
782:v
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