Express oral promise to carry goods under deck overriding exemption clauses in written contract
J Evans & Son (Portsmouth) Ltd (“Evans”) imported an injection moulding machine from a manufacturer in Milan. Andrea Merzario Ltd (“Merzario”) were employed as forwarding agents who arranged for the machine to be railed from Milan to Rotterdam and then shipped to land at Tilbury. A verbal assurance was given by a representative of Merzario to Evans that the container in which the machine was packed would be stowed below deck.
Notwithstanding the assurance, the container was shipped on deck under a bill of lading stipulating that such carriage was at the shipper’s risk.
It was common cause that the contract between Evans and Merzario was on written standard conditions. Condition 11 limited the liability of Merzario to damage occurring only while goods were in their actual custody and then only if they were guilty of wilful neglect or default. Condition 13 further limited Merzario’s liability to the value of the goods to £50 per ton of 20 cwt.
A unanimous Court of Appeal found that the oral assurance that the goods be carried below deck excluded the reliance on the exemption clauses. Lord Denning provided no principle which the finding was made but was content to rely on a line of cases, including one of his own, Mendelssohn v Norman Ltd.
Roskill LJ applied a more scientific approach. He categorised the contract between the parties as partly oral and partly written. This being so, the parol evidence (or integration) rule was not applicable and evidence could be lead of an oral promise. Treating the matter as one of “construction” he found that the intention of the parties was that the oral promise should override the written exemption clauses. Roskill LJ was careful not to employ the doctrine of fundamental breach, preferring to state that the promise to carry under deck would be “illusory” if the exemption clauses were found to operate. But this is exactly what the doctrine of fundamental breach holds. Fundamental breach is simply an assumption regarding the intention of the parties to reconcile two apparently conflicting provisions: the parties could never have intended one party to be free to ignore an essential undertaking.
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