M100 LLB Law

Photo Production Ltd v Securicor Transport Ltd [1980] AC 827

Lord Wilberforce reverse the decision provided by Court of Appeal in Photo Production Ltd v Securicor Transport Ltd case and held that the clause was valid and exempt the employee from liability for damage. Lord Wilberforce rejected the judgment of Lord Denning’s regarding application of ‘doctrine of fundamental breach’ in the case. Lord Wilberforce provided that a “rule of construction” approach will apply to the case. The “rule of construction” provides that the exemption provided in the employment contract must be interrupted just like any other term regardless whether a breach has occurred or not. The possibility of the elimination of liability clause can be determined by scrutinising the method in which the contract was constructed. In the given facts of the case, Lord Wilberforce held that the exclusion clause protects the employee and prohibits all liabilities even when the injury was caused intentionally. Lord Wilberforce went out of his way to disapprove the application of ‘doctrine of fundamental breach’ in this case.

Lord Wilberforce stated that the judgement provided by Lord Denning is based upon a similar judgement provided by him in Harbutt’s “Plasticine” Ltd v Wayne Tank & Pump Co Ltd [1970] 1 Q.B. 447case. The principle of such case divided the breach of contract into two parts. The first part provides that if a party breaches the terms of a contract then the innocent party has the right to remove waive the provision of the exclusion clause. In the second part, it provides that if the breach of the terms of a contract automatically terminates a contract, then innocent party does not require applying for termination of such contract. The first principle was applied in the Suisse Atlantique Societe d’Armament SA v NV Rotterdamsche Kohlen Centrale [1967] 1 AC 361case. It provides that if a party to a contract is found guilty of a violation of a contract and the other party gives his/her acceptance, then the contract terminates and the party cannot use the exclusion clause for their protection.

Lord Wilberforce argued that the exclusion clause can be included in a contract to alter or modify the responsibility of parties. The individuals are free to select any type of clause in their contract to remove their primary or secondary responsibilities. As long as the parties fulfill the essential elements of a contract, they can add any exclusion clause into the contract. It is also necessary that the parties to the contract did not pay any sum of money to another party which covers the potential damages of such party, in order to add the exclusion clause in the contract. These requirements were fulfilled in the contract of Photo Production Ltd v Securicor Transport Ltd case and the fire also accidentally burnt down the factory. The parties also have the intention to enter the contract which included an exclusion clause which provides that they agreed to the level of strictness in which such clause can apply. There is no availability of a rule of law which can terminate or declare the contract void. Therefore, the exclusion clause inserted by the parties is valid and it protects the employees from paying damages to the company.

Bibliography:

Cases

Photo Production Ltd v Securicor Transport Ltd [1980] (AC) 827

Harbutt’s “Plasticine” Ltd v Wayne Tank & Pump Co Ltd [1970] 1 (QB) 447

Suisse Atlantique Societe d’Armament SA v NV Rotterdamsche Kohlen Centrale [1967] 1( AC) 361