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GAZETTE
JULY-AUGUST 1981
clauses in consumer contracts and in written standard
form contracts. According to the House of Lords in
Photo Production,
in view of these provisions, the need
for judicial distortion of the English language in these
kinds of contracts has been banished. The straight-
forward route of statutory invalidity will certainly be
preferred over the more difficult route of strained inter-
pretation.
How far the logic of this dictum would apply in Ireland
is debatable. The nearest equivalent in Ireland of the
Unfair Contract Terms Act 1977 is the Sale of Go ods
and Supply of Services Act 1980. Far-reaching as this
Act is, it is not as wide as the English Act. There is, for
instance, no provision equivalent to s.3(2) of the English
Act striking down (except so far as they are shown to be
reasonable) contract terms under which a party may
claim to be entitled either to render no performance at all,
or "to render a contractual performance substantially
different from that which was reasonably expected of
him." To this extent the English Act restricts both clauses
which limit liability by narrowly defining the obligation of
the parties as well as more traditional exemption clauses.
3. Fundamental Breach
The evolution and demise of the fundamental breach rule
reflects the shift in attitudes to interpretation outlined
above. The earlier cases went no further than to suggest
that, as a principle of construction, exception clauses are,
where possible, to be construed as not exempting a party
from liability for fundamental breaches or breaches of
fundamental terms in a contract.
Later cases, however, elevated this principle to a rule of
law. In
Karsales (Harrow)
Ltd. v. Wallis,
20
where there
was a contract for the sale of a car by hire-purchase, it
was held that, despite a very wide exemption clause, the
hirer could reject the car, which had been in good
condition when he first inspected it, but was a complete
wreck when delivered. Denning L J . put forward as a rule
of law that:
It it now settled that exemption clauses of this kind,
no matter how widely they are expressed, only avail
the party when he is carrying out his contract in its
essential respects. He is not allowed to use them as
a cover for misconduct or indifference or to enable
him to turn a blind eye to his obligations. They do
not avail him when he is guilty of a breach which
goes to the root of the contract.
21
In what appears to be the only reserved Irish decision on
fundamental breach,
Clayton
Love v. B. and I.,
22
the
Supreme Court appeared to adopt the view that the
doctrine of fundamental breach operated as a rule of law
and to accept the submission that a defendant in breach
of a fundamental obligation cannot avail of any
exempting clause whatever. This conclusion was reached
with only very brief reference to authority, and there was
no examination in the reported judgments of the view of
Davitt P., the trial judge, that the doctrine of fundamental
breach rested on interpretation and that "there is nothing
to prevent parties who wish to do so from entering into a
contract containing exception clauses which will exempt
one or the other or both from liability even in the case of a
breach of a fundamental term. If that is done clearly and
unequivocally I see no reason why such a provision
should not be effective."
23
The Supreme Court decision in the
Clayton Love
case
was delivered within a day of the decision of the House of
Lords in the
Suisse Atlantique
case
24
and in ignorance of
the view, unanimously reached by the House of Lords,
that the rule-of-law doctrine of fundamental breach was
unsound. Attempts by Lord Denning to re-establish the
doctrine of fundamental breach in
Harbutts
Plasticine
Ltd. v. Wayne Tank & Pump Co. Ltd.
25
and
Photo
Production Ltd. v. Securicor
26
were emphatically rejected
by the House of Lords in the latter case.
27
It can scarcely
be doubted that, if the facts of the
Clayton Love
case were
to arise again, the Irish Supreme Court would not reach
the same conclusion, but would prefer the view expressed
in the English decisions. If the operation of the doctrine of
fundamental breach as a rule of law is rejected, in the end,
everything depends on the true construction of the clause
in dispute.
4. Implications
There can be no doubt that the application of a "literal
interpretation" rule can produce harsh results — and
results not always intended by the parties. Just as, on
questions of statutory interpretation, the Courts will not
insist on a literal interpretation where this would lead to
manifest absurdity, so also is there a case for saying that
even apparently clear words must yield, where this gives
rise to a result which cannot have been intended. For
instance, in
The Chikuma,
payment of the hire was to be
"in cash," but the court did not consider that this
required payment in dollar bills or other legal tender. That
would be absurd.
28
Other arguments can be marshalled against an
unyielding literal interpretation. It is clearly desirable that
the interpretation of written contracts should be a matter
on which a legal adviser should be able to give a clear and
confident answer. But even insisting that words should
bear their "natural and ordinary" meaning will not
always lead to this result, for the rule does not (and
cannot) apply except where the words are clear and
unambiguous; and as has already been said, few words
are used consistently with only a single meaning.
Moreover, even if the interpretation of written terms is
certain, there can often be considerable difficulty in estab-
lishing if any, and if so, which, written terms are
incorporated into a contract,
29
or whether their
interpretation is affected by oral representations.
30
Again, an omission from a contract can be as
significant as an inclusion. Some applications of an
express term may be just as unforeseen and unintended as
cases in which the contract makes no express provision,
yet in the latter event the court will often imply a term to
give the contract reasonable business efficacy or to give
effect to the putative intention of the parties.
Despite these reservations, it is right and desirable that,
within limits, parties should be able to agree their own
obligations. But it is difficult to put forward, far more to
adhere to, a single principle of interpretation. In so far as
the recent English cases suggest this approach, the Irish
courts should be slow to follow. Undue reliance should
not be placed on the use of particular words or phrases. It
is the intention of the parties which should be sought
through the words they have used in the context of the
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