Marine Deviation and Fundamental Breach Distinguished. Last updated 28-Jun-2015

Considering the length of time during which, and the extent and universality in which the practice of making such special acceptances of goods for carriage by land and water has now prevailed in this kingdom, under the observation and with the allowance of courts of justice, and with the sanction also and countenance of the legislature itself, which is known to have rejected a bill, brought in for the purpose of narrowing the carrier’s responsibility in certain cases, on the grounds of such a measure being unnecessary, inasmuch as carriers were deemed fully competent to limit their own responsibility by special contracts; considering also that there is no case to be met with in the books, in which the right of a carrier thus to limit by special contract his own responsibility has ever been by express decision denied; we cannot do otherwise than sustain such right in the present instance
Nicholson v Willan [1804] EngR 396; (1804) 5 East 507; 102 5 E.R. 513 per Lord Ellenborough.

A secret weapon

Usual reasoning that, the doctrine was a satisfactory tool when it fought injustice in cases when contract expressly allowed one party to significantly limit or exclude all together its liability, is to certain extent correct only when we speak about consumer contracts. In his colourful speech in George Mitchell (Chesterhall) Ltd v Finney Lock Seedy Ltd [1983] 1 All ER 108 at 113-114 Lord Denning MR reasoned development of the doctrine of fundamental breach as a necessary ‘secret weapon’ with the glorious aim to fight an idol called ‘freedom of contract’, which was all on the side of the big concern which had the use of the printing press . His Lordship pathetically said at p.113:

All this was done in the name of ‘freedom of contract'’. But the freedom was all on the side of the big concern which had the use of the printing press. No freedom for the little man who took the ticket or order form or invoice. The big concern said, ‘Take it or leave it.’ The little man had no option but to take it. The big concern could and did exempt itself from liability in its own interest without regard to the little man. It got away with it time after time. When the courts said to the big concern, ‘You must put it in clear words,’ the big concern had no hesitation in doing so. It knew well that the little man would never read the exemption clauses or understand them

A little further in his judgment Lord Denning MR enumerated many cases to illustrate this "abuse of power, by the strong against the weak" where it was "no freedom for the little man who took the ticket or order form or invoice". When, however, we look at the list we can see that in "shipping related" part of those cases: Glynn v Margetson & Co [1893] AC 351, [1891-4] All ER Rep 693, Cunard Steamship Co Ltd v Buerger [1927] AC 1, [1926] All ER Rep 103; Canada Steamship Lines Ltd v R [1952] 1 All ER 305, [1952] AC 192, Sze Hai Tong Bank Ltd v Rambler Cycle Co Ltd [1959] 3 All ER 182, [1959] AC 576 one would hardly find any story of ‘little man’ misery in front of ‘big concern’. And if we start our research from case law on marine deviation of the eighteenth and the nineteenth century there will be no ‘little man’ at all, but corporate bodies only.

Freedom of contract

It was ‘freedom of contract’ of course which gave to the parties bargaining power to negotiate their contract as they like, taking or removing optional clauses, which was also sustained by the law as Lord Ellenborough said in 1804. The clash of business interests by the end of the nineteenth century took somewhat political tint with the cargo interests and the shipowners vigorously attacking each other. And although it was mainly related to Chamberlain’s unsuccessful efforts to pass the Bill which would end the practice of ship owners over-insuring their vessels, so called ‘coffin ships’, it also had an effect on some part of legal society, who viewed the owners’ side as being reduced "substantially to the condition of irresponsible bailees". Probably this opinion formed that background which crystallised decision in Balian & Sons v Joly, Victoria & Co Ltd (1890) 6 TLR 345, where ‘Lord Esher was prepared to say that a deviation would be treated in law as fundamentally changing the nature of a voyage so that after a deviation "the whole bill of lading was gone". The short explanation was that he thought that the duty to follow the contractual route was important, that steamship bills of lading were often unfair and that legislative reform was unlikely. To prevent avoidance of the obligation to follow the contractual route, he was quite willing to say that, after a deviation, the benefit of all the pro-carrier provisions of the special contract would be lost.’

But all the above said does not help one to see how that battle over liabilities of the carrier and the merchant in the contract of carriage brought about Lord Denning’s thesis connecting deviation cases to the doctrine of fundamental breach: a secret weapon in the twentieth century fight between the big concern and little man.

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