Exclusion Clauses in Contracts

This assignment examines the landmark legal case of *Photo Production Ltd v Securicor Transport Ltd*. It delves into Lord Wilberforce's ruling, which overturned the Court of Appeal's decision and upheld the validity of an exclusion clause in the employment contract. The analysis highlights Lord Wilberforce's rejection of the 'doctrine of fundamental breach,' his adoption of a 'rule of construction' approach, and the implications for parties' freedom to define liability within contractual agreements.

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Law

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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 1case 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. 4472case. 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 3613case. 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
1 Photo Production Ltd v Securicor Transport Ltd [1980] (AC) 827
2 Harbutt’s “Plasticine” Ltd v Wayne Tank & Pump Co Ltd [1970] 1 (QB) 447
3 Suisse Atlantique Societe d’Armament SA v NV Rotterdamsche Kohlen Centrale [1967] 1( AC) 361

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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.

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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