CASE:
AILSA CRAIG FISHING CO LTD VS MALVERN FISHING CO & ANOR [1983] WLR 964
FACTS:
The appellant boat owners were members of an association which had contracted with one of the respondents, a security company, for the provision of security services for boats berthed in a particular place. The contract provided that even if there was a total failure to provide the services that had been contracted for, the respondent’s liability was limited to the sum of ₤1,000. The respondents were found to be at fault for an event that resulted in the sinking of the appellant’s boat. The appellants claimed, inter alia, that there had been a total failure to provide security and thus the respondents could not assent the limitation of liability contained in the contract.
HELD:
The strict principles that apply when constructing an exemption clause, particularly where there has been a total breach of contract, do not apply in their full rigour when the clause merely limits liability.
[Clauses limiting liability] will of course be read contra proferentem and must be clearly expressed, but there is no reason why they should be judged by the specially exacting standards which are applied to exclusion and indemnity clauses. The reason for imposing such standards on these clauses is the inherent improbability that the other party to a contract including such a clause intended to release the proferens from a liability that would otherwise fall upon him. But there is no such high degree of improbability that he would agree to a limitation of the liability of the proferens, especially when the potential losses that might be caused by the negligence of the proferens or its servants are so great in proportion to the sums that can reasonably be charged for the services contracted for.