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CAMPBELL V. BRIDGE FACTS By an agreement in writing on a printed form dated July 20, 1959, and made between the respondents and the appellant, the respondents agreed to let and the appellant agreed to hire (with an option to purchase as therein provided) a used Bedford Dormobile motor-car described therein as having been manufactured in the year 1954, for a total hire-purchase price of PS482 10s. Clauses 6 to 9 of the agreement were as follows: "6. The hirer may at any time terminate the hiring by giving notice of termination in writing to the owners, and thereupon the provisions of clause 9 hereof shall apply. 7. If the hirer shall fail to pay any sum due hereunder or to observe any of the stipulations in clause 4 hereof or any other stipulations on his part contained herein the owners may thereupon and without notice terminate the hiring and/or this agreement, and may, subject only to the restriction of the owner's rights to recover (where the hire-purchase price does not exceed
PS300 and contained in the statutory notice hereto), retake possession of the vehicle whereupon the provisions of clause 8 hereof shall apply. It was a provision of the said agreement that if the defendant should terminate the hiring he should pay to the plaintiff company by way of agreed compensation for depreciation a sum equal to two-thirds of the hire purchase price less payments already made. The appellant complied with his obligations in respect of the initial rental of PS105 and paid the sum of PS10 10s. in respect of the first monthly rental of PS10 9s. 2d. which fell due on August 20, 1959. On September 3, 1959, the appellant wrote to the respondents in the following terms: Agreement No. 78900 Dear Sir, Owing to unforeseen personal circumstances I am very sorry but I will not be able to pay any more payments on the Bedford Dormobile. Will you please let me know when and where I will have to return the car. I am very sorry regarding this but I have no alternative. The respondents did not reply to that letter, and on or about September 14, 1959, the appellant returned the motor-vehicle to the sales room of Monarch Car Services who were the motor dealers concerned in the transaction. This was accepted as a return of the motor-car.
The defendant admits that on or about September 14, 1959, he terminated the said agreement. The defendant denies that he is indebted to the plaintiffs in the sum claimed or in any other sum. The alleged compensation for depreciation equal to two-thirds of the hire-purchase price is a penalty and is not recoverable.
VISCOUNT SIMONDS Not breach, exercising option under the contract But I find it impossible to treat the issue between the parties as one in which the respondents alleged a breach by the appellant of the agreement and an acceptance by them of the breach as a repudiation of it. Nor can the admission by the appellant that he terminated the agreement be easily translated into an allegation that he committed a breach of it and that the respondents themselves put an end to it and were suing him for damages for the breach. Since there is no breach, no question of the rule against penalties I state my opinion very shortly, for I agree with the judgments given by Holroyd Pearce and Harman L.JJ. in the Court of Appeal. Clause 6 is not a penal clause. It confers on the hirer a right for which he agrees to pay a price. He need not exercise it if he does not want to. It is a right which is sedulously preserved for the hirer by Act of Parliament and, though the amount here involved takes it out of the ambit of the Act, the principle is the same. I must dissent, as Harman L.J. did, from the suggestion that there is a general principle of equity which justifies the court in relieving a party to any bargain if in the event it operates hardly against him... In the present case there is nothing which would justify the court in granting relief to a hirer who exercised his rights under clause 6. As, however, this case has in your Lordships' House become a claim under clause 9 for a breach by the appellant of his contractual obligations, the question arises whether the amount allegedly due under that clause is a penalty or liquidated damages. Upon this question I have had the privilege of reading in print what your Lordships propose to say and agree that it is the former. LORD MORTON There was a breach of contract
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