FUNDAMENTALISM IN CONTRACT
| DOI | http://doi.org/10.1111/j.1468-2230.1967.tb01158.x |
| Published date | 01 September 1967 |
| Date | 01 September 1967 |
FUNDAMENTALISM IN
CONTRACT
Now
that some of the dust has settled, it is proposed
to
attempt
to
evaluate the impact of the House of Lords decision in
Suisse
Atlantique
both from the point of view of the
cc
little man
”
hope-
lessly at odds with the standardised contracts of the big legions and
also from the point of view of
cc
the ordinary law of contract,”
which, according to revanchist academic opinion, has been
vindi-
cated in full measure. Undoubtedly one likely result is greater
emphasis in the future
on
the rules surrounding breach of contract
as opposed to those rules dealing with formation. Williston noted
that English, and, to a lesser extent, American courts have groped
somewhat uncertainly for fundamental principles concerning breach
of contract and its effects.2
Suisse Atlantique
has helped to clarify
some
of the issues involved in this area.
To
review the facts brieflyY8 the appellants, who had been unsuc-
cessful in their claim for damages over and above the demurrage
payments provided for in their two years’ consecutive charter for
the carriage of coal
from
the United States to ports in Europe,
appealed to the House of Lords.
In
so
doing they fell back upon
a
supplementary case, the gravamen of which was that the respon-
dents (the charterers) were precluded from relying solely
on
the
demurrage clause in the charterparty because by deliberately per-
forming fewer voyages than could ordinarily have been accomplished
they were guilty of a fundamental breach
or
deviation which, as
a matter of law, incapacitated them from relying
on
the clause.
The decision itself went off
on
comparatively narrow grounds,
namely, that
no
contractual term, express
or
implied, governed the
number of voyages, that the demurrage clause in question was not
an exemption clause
strict0 sensu
and that, in any case, the appel-
lants had not sailed the ship away,
i.e.,
they had affirmed the
charter and its terms
on
the assumption that the breach was
fundamental. Although their Lordships were not therefore called
upon to apply the principles which they discussed to the instant
case, the views expressed are of broad interest
on
a number of
general contractual questions such
as
the fundamental term itself,
the relationship between breach of such
a
term and fundamental
breach, the nature of exemption clauses and their availability where
a
breach has occurred, the effect of breach and the relevance of
deliberateness.
”
1
[1966]
2
W.L.R.
944; [1966]
’2
All
E.R.
61; [1967]
A.C.
361,
H.L.
2
Williston
on
Contract,
2nd
ed.,
8.
896.
8
See
Treitel
(1966)
29
M.L.R.
546.
531
582
THE
MODERN
LAW REVIEW
VOL.
30
FUNDAMENTAL
TERM
Two of their Lordships‘ were clearly inclined to perpetuate the
concept of the fundamental term defined as a
(‘
stipulation which
the parties have agreed either expressly
or
by necessary implication
or
which the general law regards as a condition which goes to the
root of the contract
so
that any breach of that term may at once
and without further reference to the facts and circumstances be
regarded by the innocent party as a fundamental breach.” The
remaining judgments omitted discussion of the fundamental term,
preferring a discussion of fundamental breach itself, although Lord
Wilberforce treated fundamental breach as a genus comprising two
types of breach,
viz.,
(i)
breach in the form of performance
((
totally
different
’)
from that which the contract envisaged, and (ii) breach
more serious in nature than one attracting merely a right to
damages.” There is much to be said in favour of jettisoning the
concept of the fundamental term
from
our
law. Whatever
it
is-
‘(
something
.
.
.
narrower than a condition,” the
((
core
’)
of
the contract, something identiiicatory
or
definitive of the subject-
matter-the doctrine has not escaped criticism.1° A seemingly neat
classification of terms into condition, warranty, warranty
ex
post
facto
and fundamental term may, as a conceptual framework, help
the expositor of law, but as Lord Devlin points out in a recent
article
of
great interest,” lawyers have tended to fasten upon
certain identifiable markings from previous cases-“ once a con-
dition always a condition.” Although Lord Devlin endorsea the
recent concentration upon breach and calls for a synthesis which
would unite differing forms of discharge such as breach and frustra-
tion, he does give us some further conceptualism in
cc
the
funda-
mental term
’’
(constituting the hard core of the contract) and
‘c
a
fundamental term
”
(affecting the substance of the adventure).
One can only echo the recent call
for
a more practical level of
discussion in place of the
((
vague and obscure conceptualism of the
present time.”
12
Conditions as described by an imposing array
of judicial synonyms-‘‘ foundation,”
(‘
substratum,”
“
essence
”
and
“
root
’’
are typical-are difficult to accommodate alongside
4
Viscount Dilhorne and Lord Upjohn.
5
Per
Lord Upjohn [l966]
’2
W.L.R. 944 at
p.
979.
7
Per
Devlin
J.
in
Smeaton
Hamcomb
v.
Sassoon
I.
Setty
(No.
1) [1963]
1
W.L.R. 1468 at p. 1470.
8
Stoljar 16
M.L.R.
!26
and
16
M.L.R. 174.
0
J.
L.
Montrose Some Problems about Fundamental
Terms”
[1967]
C.L.J. 12-16.
10
F.
M.
B.
Reynolds, 79 L.Q.R. 534:
a
valuable article which questions the
conceptualist approach. Cheshire
&
Fifoot,
Law
of
Cytract,
6th ed., prefer
“
fundamental obligation
”
on the ground that
it
is
misleading
”
to
talk
of
a
mere term
(at
p.
116).
The
views there
expressed
now require
o
[i9661
a
W.L.R.
944 at p. 986.
qualification in view of
SUi88e
Atlantique.
11
[1966]
C.L.J.
193-216.
12
Treitel (1967)
30
M.L.R. 139.
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