Canada Steamship Lines Ltd v.

The King [1952] AC 192, 208 in the following terms:

UCTA NOTES: FOR PROBLEM AND ESSAY

If the clause contains language which expressly exempts the person in whose favour
it is made (hereafter called ‘the proferens’) from the consequence of the negligence of
his own servants, effect must be given to that provision . . .

(2) If there is no express reference to negligence, the court must consider whether the
part of the servants of the proferens. If a doubt arises at this point, it must be resolved

(3) If the words used are wide enough for the above purpose, the court must then con-
sider whether ‘the head of damage may be based on some ground other than that of
negligence’, to quote again Lord Greene in the
‘other ground’ must not be so fanciful or remote that the proferens cannot be supposed
facie wide enough to cover negligence on the part of his servants. words used are
wide enough, in their ordinary meaning, to cover negligence on the against the
proferens . . Alderslade case [1945] KB 189, 192. The to have desired protection
against it; but subject to this qualification, which is no doubt to be implied from Lord
Greene’s words, the existence of a possible head of damage other than that of
negligence is fatal to the proferens even if the words used are prima

 In order to constitute an express reference to negligence it does not suffice for a party to use general words such as
‘loss however caused’ or ‘damage howsoever arising’. The word ‘negligence’ or a synonym for negligence (such
as carelessness) must be used (see Shell Chemicals UK Ltd v. P & O Roadtanks Ltd [1995].
 general words such as ‘loss howsoever caused’ to cover both negligently inflicted loss and non-negligently
inflicted loss
 According to the third principle, general words will only be effective to exclude liability for negligently inflicted
loss in the case where the only realistic loss likely to be suffered by the claimant is loss suffered as a result of the
negligence of the defendants. Where there is a realistic possi- bility that the defendant might be liable to the
claimant either in negligence or on some other basis then the scope of the exclusion clause will generally be
confined to the non-negligent source of liability and leave the defendant with no protection at all in the event that
the claimant suffers loss as a result of the negligence of the defendant.

Hollier v. Rambler Motors (AMC) Ltd [1972] Court of Appeal

 Nevertheless, went on to consider whether the clause was effective, as a matter of construction, to exclude the defendants’
liability in negligence. They concluded that it was not.

 A party who wishes to exclude liability for negligence should say so expressly and then effect will be given to the
clause (subject now to the Unfair Contract Terms Act 1977,
 But it seems unreasonable if the aim is to give effect to the intention of the parties because it denies to parties the
ability to use words such as ‘loss howsoever arising’ if they wish to be sure that they have excluded liability for
negligently inflicted harm. The law does not conclude that such general words are always ineffective to exclude
liability for negligence because liability was effectively excluded in both Rutter v. Palmer and Alderslade v.
Hendon Laundry Ltd (both of which are discussed in the judgment of Salmon LJ).
  The basic flaw in the Canada Steamship rules is the assumption that contracting parties do not intend to use
general words of exclusion to cover both negligently inflicted loss and non-negligently inflicted loss.
 The only possible answer seems to be that the Canada Steamship tests can fail to give effect to the intentions of the
parties.
 In other words, the tests are based on the assumption that the parties did not intend to encompass more than one
type of loss within the same clause. Yet where the parties use the words ‘howsoever caused’ surely this is their
intention.
 However the House of Lords has refused to discard the Canada Steamship rules. Instead they have retained them
while emphasizing that the paramount task of the court is to give effect to the intention of the parties see HIH
Casualty and General Insurance Ltd v. Chase Manhattan Bank [2003]
 This reluctance is understandable but it does not justify the Canada Steamship rules, in particular the operation of
the second and the third rules. These rules should be discarded and the courts should instead be left free to give the
words in the contract their natural and ordinary meaning. This being the case, words such as ‘howsoever caused’
or ‘howsoever arising’ should ordinarily be effective to exclude liability in negligence.

fundamental breach

It was, essentially, a device that was used by the courts in order to con- trol unreasonable exclusion clauses before they were
given statutory jurisdiction to do so in the Unfair Contract Terms Act 1977.

House of Lords in Suisse Atlantique Société d’Armement Maritime SA v. NV Rotterdamsche Kolen Centrale [1967]

 fundamental breach was a rule of construction not a rule of law.

 The House of Lords did not state that, as a matter of law, one party cannot exclude or limit liability for a
fundamental breach of contract.
 Lord Hoffmann in BCCI v. Ali (p. 409, at the beginning of Section 2) to state that there was no longer any need for
the doctrine in the light of the enactment of the Unfair Contract Terms Act.