Lloyd's Maritime and Commercial Law Quarterly
TOWAGE CONDITIONS AND FUNDAMENTAL BREACH
Jonathan S. Lux
Solicitor 1.
English law relating to towage contracts, together with any exculpatory clauses which they may include, is not subject to any special rules. In the absence of specific statutory provisions, it is the general law of contract which is to be applied.
Orge v. New Steam Tug Co. [1958] 31 L.T.Q.S. 85 appears to be one of the earliest cases in which a tug owner successfully invoked an exceptions clause to exclude his liability for the consequence of the negligence of his crew.
While paying lip service to the sanctity of the “bargain” made by the parties, the courts have tended to look askance at the all-embracing exemptions clauses so often found in towage contracts. Thus, in Emily Charlotte v. Newona
(1920) 4 Ll.L.Rep. 156, Mr Justice Hill commented as follows:—
“If tug Owners desire to put upon the tow liability for damage to the tug by negligence of the tug, they must do so in clear and unambiguous language”.
In the course of this century, and particularly during the last decades, the courts have developed the concept of fundamental breach as a means of scrutinising exemptions clauses. An early example is the case of the Cap Palos (1921) P. 458. The defendant tug owners contracted to tow the plaintiffs’ schooner, Cap Palos, on a round voyage of which the first stage was Immingham to Hartlepool. Through the negligence of the defendant’s tug masters the vessels got into Robin Hood’s Bay on the night of Oct. 23. The tugs went aground and lost their hawsers and the Cap Palos came to anchor. The tugs refloated on the early morning of Oct. 24 and proceeded to Hartlepool, leaving the schooner in the Bay with a rising north-east wind. The Cap Palos remained in the Bay making vain attempts to get out until Oct. 26 when she drifted on to the rocks and became a constructive total loss.
An exemptions clause in the Towage Contract covered (inter alia):—
“The acts, neglect or default of the Masters, Pilots or crew of the steam tugs … or any damage or loss that may arise to any vessel or craft being towed, or about to be towed, or having been towed … whether such damage arise from or be occasioned by any accident or by any omission, breach of duty, mis-management, negligence, or default of the steam tug owner, or any of his servants or employees”.
At first instance, Mr Justice Hill held that the tug owner was not liable on the basis that “the clause is as wide as possible”. In the Court of Appeal, which reversed the judgment, Lord Justice Atkin said:—
“The question that arises is whether under the above circumstances the Defendant can rely upon the exceptions. In my opinion they have no application in the facts of this case. It is immaterial to discuss whether the true view is that the wide words of the exceptions ‘default’, ‘omission’, ‘breach of duty’ properly construed do not extend to cases where the contracting party ceases altogether to perform the contract; or that the exceptions construed in their widest sense do not apply where the contract is not being performed at all. The principle appears to me to be common to all classes of contract … The principle is … that if you undertake to do a thing in a certain way, or to keep a thing in a certain place, with certain conditions protecting it, and have broken the contract by not doing the thing contracted for in the way contracted for, or not keeping the article in the place in which you have contracted to keep it, you cannot rely on the conditions which were only intended to protect you if you carried out the contract in the way in which you had contracted to do it. Per Scrutton, L.J., in Gibaud v. Great Eastern Railway Company (1921)
2 K.B. 426, 435”.
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