contract law Cases

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Ailsa Craig Fishing Co. Ltd v Malvern Fishing Co. Ltd and Another [1983] 1 WLR 964


Malvern Fishing Company (M) were contracted to provide a security service ensuring that moored boats in a harbour were kept safe. Ailsa Craig Fishing (A) had a boat moored at the harbour in question, and were members to the association under which M protected the boats. A’s boat was damaged by a neighbouring vessel, and sank. The neighbouring boat was owned by M. A sought to recover damages from M for the complete loss of their vessel.

The contract for security services between M and A included a limitation clause under condition 2(f) which limited damages to £1000 where the damage was not caused by fire or theft.


At court of first instance damages of £55,000 were awarded on the basis of negligence and breach of contract on the part of M. On appeal it was questioned whether the limitation clause in the contract was valid, considering that M had completely failed to perform under the contract.


The clause in 2(f) was held to be valid, and the damages available limited to no more than £1000. The judgment here held that where a limitation clause is expressly and clearly stated in a contract, then the terms of such a clause would be valid and can limit liability for negligence.