he contract of carriage, as any other legal contract in Canada, is also interpreted as subject to the considerations and relevant rules of interpretations under common law. The courts have investigated this aspect quite often, discussing whether the carrier could be held liable for a fundamental breach of contract (essentially non-performance of the contract in its entirety), thereby terminating the contract and barring the carrier from relying upon the limitation of liability clause appearing in the contract of carriage.

 

T

FUNDAMENTAL BREACH OF CONTRACT

The question is, what constitutes negligence and what constitutes a fundamental breach of contract?

 

Referring Hunter Engineering Co. v. Syncrude Canada Ltd., 1989, Supreme Court of Canada:

 

A fundamental breach occurs where the event resulting from the failure of one party to perform a primary obligation has the effect of depriving the other party of substantially the whole benefit that the parties intended should obtain from the contract.

In Lotepro Engineering and Construction Ltd. v. Air Canada, 1981, a case of non-delivery, Rowbotham J., writing for the Alberta Court of Queen’s Bench, stated in various paragraphs, reproduced in part:

 

 

The second part of the question raised by the plaintiff concerns the matter of a "fundamental breach" or a "breach of a fundamental term" of the contract by the defendants and whether or not such breach is of such a fundamental nature as to terminate the contract and consequently bar the defendants from reliance upon the limitation of liability provisions contained in it.

 

The sole purpose of the contract in the present case was the carriage of goods from the shipper to the consignee. It would be reasonable to suppose that a total failure on the part of the defendants to deliver anything at all to the consignee would constitute a breach of the fundamental term of the contract rather than the negligent performance of it. However, the cases do not support this point of view.

 

It seems to me to be clear law that the defendant may invoke the limitation of liability provision of the contract, despite the facts that the sole purpose of the contract was for the carriage of goods to a consignee and that no goods were in fact delivered to the consignee.

 

 

In Punch v. Savoy's Jewellers Ltd. et al., 1986, the Ontario Court of Appeal discussed a case where a ring was lost in transit and no reasonable explanations were provided. It was alleged that one of the carrier’s employee may have stolen the ring. Cory J.A., stated in various paragraphs:

 

A limitation clause in a contract between a carrier and a jeweller for the carriage of a valuable ring, which limited the carrier's liability to $50 whether the loss arose through "negligence or otherwise", does not limit the carrier's liability for a loss which may well have been caused by the theft of an employee of the carrier in a case where all trace of the ring was lost from the moment the employee picked it up from the jeweller. 

 

Where there is an unexplained loss of goods which may have been occasioned by theft by an employee, the bailee should be liable for that loss unless the contract of bailment contained a clause clearly exempting the bailee from loss occasioned by the theft of an employee. My construction of this contract leads me to the conclusion that the disappearance of the ring without any explanation in circumstances where the possibility of theft existed amounted to a fundamental breach of the contract.

e extremely wary

he contract of carriage, as any other legal contract in Canada, is also interpreted as subject to the considerations and relevant rules of interpretations under common law. The courts have investigated this aspect quite often, discussing whether the carrier could be held liable for a fundamental breach of contract (essentially non-performance of the contract in its entirety), thereby terminating the contract and barring the carrier from relying upon the limitation of liability clause appearing in the contract of carriage.

 

 

FUNDAMENTAL BREACH OF CONTRACT

The question is, what constitutes negligence and what constitutes a fundamental breach of contract?

 

Referring Hunter Engineering Co. v. Syncrude Canada Ltd., 1989, Supreme Court of Canada:

 

A fundamental breach occurs where the event resulting from the failure of one party to perform a primary obligation has the effect of depriving the other party of substantially the whole benefit that the parties intended should obtain from the contract.