Introduction

Concept of fundamental breach

Main body

Doctrine of fundamental breach; position at common law

Doctrine of fundamental breach; position in Tanzania

Conclusion

Reference
Introduction

Concept of fundamental breach

The fundamental breach refers to one party of the contract not keeping their part of the deal by
failing to complete a contractual term that was essential to the agreement so much so that another
party could not complete their own responsibilities in the contract.

Also fundamental breach means that breach which goes to the root of the contract. It is that
breach which course to loss all benefit which he expected to get under the contract.1

Doctrine of fundamental breach; position at common law

At common law, fundamental breach was a device that was used by the courts in order to control
unreasonable exclusion clauses before they were given statutory jurisdiction to do so.2 The
approach of the court to this process of limiting the effect of exemption clauses took two distinct
lines; first an exemption clause which sought exclude a serious breach of contract was to be
construed narrowly in order to reduce the protection offered by the clause; second the court
developed a substantive rule of law the exemption clauses the sought to exclude liability for
fundamental breach would be in effective. 3 The decisions of the court contained examples of a
particularly strained construction in the favour of the claimant. Principally in an attempt to
produce a degree of consumer protection. In some cases where there was no room even for a
strained construction, the courts appeared to go further and introduce substantive rule that no
exemption clause, however worded, could be relied upon to escape a particular serious breach of
contract; this was referred to fundamental breach.4

For example in the case of karsales (harrow) ltd v. Wallis5 Wallis contracted to buy a
secondhand car. What was delivered to him was a wreck a car. Where Wallis refused to accept
the wreck the seller invoked the clause which provided; No condition or warrant that the vehicle
is roadworthy or to its age, condition or fitness for any purpose is given by the owner or implied
therein. LORD Denning pointed out that the seller had contracted to sell a car and at the same

1
nditi
2
PG 667 CONTRACT LAW MCKENDRIC
3
Pg 231 law of contract Paul Richard
4
Pg 667 contract law mckendric
5
[1956] 1 WLR 936
time had tried to exclude themselves from liability should it turn out not to be a ‘car’ at all. His
Lordship found that by deriver a wreck instead of a car the seller had committed a fundamental
breach and as a result he did not allow them to invoke the exemption clause6.

Also in the case of Suisse Atlantique sociate d’ Armement Mantime SA v. NV Rotterdamsche

Kolen Centrale7 in this case the plaintiffs chartered to the respondents for a period of two years.
It was agreed that, in the events of delays in loading or unloading the vessel, the respondents
would pay to the appellant $1000 a day by way of demurrage. Lengthy delay occurred for which
the appellant alleged the respondents were responsible, but they nevertheless allowed the
respondent to have the use of ship for the remainder of the term. On the conclusion of the
contract, they sued the respondent for damages, claiming a sum excess of that stipulated for as
demurrage. The respondent relied on demurrage clause as limiting their liability. The House of
Lords had denied the existence of such rule but did so in language which suggested that it was
significant that the claimant had affirmed the contract. This left room for a further argument that
the effect of fundamental breach was to bring the contract to an end and, with it; the exemption
clause relied upon by the defendant.8

Also in case of Harbert’s plasticicive Ltd V. Wayne Tank9 Lord denning, MR stated that “when
one party has been guilty of a fundamental breach of a contract that is a breach which goes to a
very root of it, and the other side accept it so that the contract comes to an end or if it comes to
an end anyway by reason of the breach then the guilty party cannot real on an exemption or
limitation clause to escape from liability for the breach” the importance of this statement lies in
the assertion that as a matter of law a part cannot rely on the exclusion or limitation clause where
he has committed a fundamental breach of the contract10

The suggestion of this argument was final discussed by the House of Lords in photo production
ltd v. securior transport ltd.11 Lord Diplock confirmed that the effect of electing to terminate a
contract for breach is not to bring the contract to an end. The parties are released from
performance of any future primary obligation but the contract itself continues, including any
6
Nditi pg 211
7
[1967] 1 AC 361
8
Pg.677 law of contract by treitel
9
[1970]
10
Pg 418 contract law Ewan Mckendrick
11
[1980] ac 827
exemption clause. Whether the clause applies to the secondary obligation of the party in the
breach to provide a remedy is purely a matter of construction.12

Doctrine of fundamental breach; position in Tanzania

In Tanzania were invocated in appropriate, cases the substantive common law doctrine of
fundamental breach the first illustrative case in R. F. Mboya V. Mewe Singh Mangat 13. In 1964
the defendant acquired, on hire- purchase the vehicle from the plaintiff, sought arrears for 9
unpaid month instalment. The defendant refused to pay because they have expected a roadworthy
vehicle the contract contained a clause specifically waiving all warranties, both expenses under
implied. The high court stated the principle to the applied where a part who had committed
fundamental breach sought to relay on disclaimer. The court stated that a disclaimer of
warranties ,no matter how widely expressed ,is only available to a party where he is carrying out
the contract its essential respect .

Conclusion

Reference

12
Pg.667 law of contract by treiter
13
[1969] HCD no1