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A PARTY IN FUNDAMENTAL
BREACH OF CONTRACT CANNOT
RELY ON AN EXEMTION CLAUSE
IN THE CONTRACT
OCTOBER 2010 VOL. X NO. X
Appellants appeal to the Court of
Appeal was dismissed and they further
appealed to the Supreme Court seeking
to rely on the exemption clause shown
on the Airway bill. In rejecting this
argument, the Supreme Court held that
In the case of International Messengers
Nigeria V. Pegofor Industries Ltd [2005
All NLR 234], the court reinstated the
common law rule that exemption clause
is not available to a party who is in
fundamental breach of a contract.
it cannot reasonably be maintained that
it was the intention of the parties that in
the
circumstances
fundamental
term
in
of
which
the
the
contract
between the parties was breached by the
appellant, the exclusion clause in the
Airway Bill that limits the liability
The respondents who were plaintiffs at
under the contract to N500 can still be
the trial court had delivered their faulty
operative. The defendant’s failure to
spare part to the appellant, a courier
freight
company for delivery to a company in
contracted and also loss of same was
Italy for repairs. The respondents paid
guilty of a fundamental breach of
the agreed N2,110 for the courier and
contract and thus not entitled to be
obtained receipt for same and an
protected by the exemption clause in the
Airway Bill on the reverse of which was
Airway Bill.
printed an exclusion clause limiting the
appellant’s liability for loss or damage
to N500. Subsequently the spare part
was not delivered to its destination and
no reason for the failure was given by
the appellants. Hence the respondent
brought a claim at the High court for
breach
of
contract
and
bailment.
Judgment was entered in favour of the
respondents.
the
plaintiff’s
package
as
Section 190 of the contract Law Cap 32,
Revised Laws of Anambra State, 1991
provides that “nothing in the foregoing
shall be construed as to enable a party guilty
of fundamental breach of a contract or a
breach of a fundamental term to rely upon
an exemption clause so as to escape
liability”.
Further, defendant’s counsel sought to
distinguish an exemption clause from a
limitation clause, the former exempting
©Blackfriars LLP 2010. All rights reserved. This document is for general guidance only. Definitive advice
should be sought from counsel if required. Blackfriars LLP, The Penthouse Floor, Itiku House, 28-30
Macarthy Street, Lagos. Tel: +234 1 739 0397; +234 1 736 9797; +234 1 736 9795; Fax: +1 646 536 8978.
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liability and the latter limiting the
Carriers and those with whom they
damages payable in the event of liability
entered into a contract for carriage of
and then urged the court
that the
goods by air. Since the respondent did
Airway Bill contained a limitation clause
not make any contract with any airline,
which therefore takes it outside the
it was not bound by the 1953 Order.
purview of section 190 of the Anambra
State Contract Law, the court however
failed to accept the argument but held
that a limitation clause which limits
liability to a ridiculous amount of
money was as good as a clause
exempting liability. It further stated that
Hence the appeal was dismissed and the
court upheld the judgment of the trial
court which had awarded damages in
favour of the respondents to cover the
amount for the replacement of the lost
spare part.
a limitation clause is a species of which
an exemption clause is a genus
For further inquiries, please contact:
The defendant also argued that by the
Ms. Grace Uwakwe
Tel: +234 1 739 0397
Email: [email protected]
Fax: +1 646 536 8978
Carriage by Air (Colonies Protectorates
and Trust Territories) Order, 1953,
Volume XI Laws of the Federal Republic
of Nigeria 1958(the 1953 Order), the
carrier of goods was liable for, among
other things, destruction or loss or
damage to goods and that a state law
cannot override a subsisting federal
legislation.
The Court observed that since an appeal
is the continuation of the case put
forward in the court of first instance, a
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party is not permitted on appeal to
change that case. In any case, the court
dismissed the applicability of the 1953
Order and held that it simply governs
the relationship between the Airline
©Blackfriars LLP 2010. All rights reserved. This document is for general guidance only. Definitive advice
should be sought from counsel if required. Blackfriars LLP, The Penthouse Floor, Itiku House, 28-30
Macarthy Street, Lagos. Tel: +234 1 739 0397; +234 1 736 9797; +234 1 736 9795; Fax: +1 646 536 8978.
http: www.blackfriars-law.com Email: [email protected]