E. Conclusion

AuthorJohn D. McCamus
ProfessionProfessor of Law. Osgoode Hall Law School, York University
Pages776-779

Page 776

The nature and scope of the doctrine of fundamental breach has varied over time in both England and in Canada. In England, with the enactment of the Unfair Contract Terms Act 1977,94the evolution of the doctrine appears to have been completed. With the discretion conferred by that statute on the courts to control the application of exculpatory clauses in consumer contracts and other standard form agreements, the need for a common law doctrine conferring a similar discretion has disappeared. Accordingly, under English law, the doctrine of fundamental breach appears to have settled into a simple matter of applying the usual techniques of contract interpretation, including the principle of contra proferentum, to exculpatory clauses in agreements not subject to the legislation. In common law Canada, in the absence of similar legislation, the courts have persisted, however, in developing a common law device for controlling the application of disclaimer clauses. Nonetheless, there remain some similarities between the English and Canadian versions of the doctrine. In both systems, in the case of an ordinary commercial transaction, a construction approach will be followed. Further, it appears that in both systems, an exculpatory clause will not be applied or interpreted in such fashion as to render nugatory or illusory the obligations of one party.95Further, Canadian courts continue to interpret clauses strictly on the basis of the contra proferentum principle.96

Page 777

Beyond these points of similarity, however, it is clearly established that an independent doctrine of fundamental breach has been developed in Canadian common law that differs in material respects from the current English doctrine. In Hunter, both Dickson C.J.C. and Wilson J. accepted the proposition that in the absence of Canadian legislation97 equivalent to the Unfair Contract Terms Act 1977, there exists a continuing need for a residual judicial discretion to intervene and withhold application of exculpatory clauses that bring about results that are either "unconscionable" in Dickson C.J.C.’s terms or "unfair and unreasonable" in the terms adopted by Wilson J. Although the failure of the Supreme Court either to speak with one voice or offer a majority view in Hunter leaves the precise nature of the Canadian doctrine in a somewhat uncertain state, it is nonetheless possible to identify the main features of the doctrine. First, it appears to be generally accepted...

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