Exclusion Clause Case Summaries

A. INCORPORATION

L’Estrange v Graucob [1934] 2 KB 394

The plaintiff bought a cigarette machine for her cafe from the defendant and signed a sales agreement, in very small print, without reading it. The agreement provided that “any express or implied condition, statement or warranty… is hereby excluded”. The machine failed to work properly. In an action for breach of warranty the defendants were held to be protected by the clause. Scrutton LJ said:

“When a document containing contractual terms is signed, then, in the absence of fraud, or, I will add, misrepresentation, the party signing it is bound, and it is wholly immaterial whether he has read the document or not.”

Curtis v Chemical Cleaning Co [1951] 1 KB 805

The plaintiff took a wedding dress to be cleaned by the defendants. She signed a piece of paper headed ‘Receipt’ after being told by the assistant that it exempted the cleaners from liability for damage to beads and sequins. The receipt in fact contained a clause excluding liability “for any damage howsoever arising”. When the dress was returned it was badly stained. It was held that the cleaners could not escape liability for damage to the material of the dress by relying on the exemption clause because its scope had been misrepresented by the defendant’s assistant.

Parker v South Eastern Railway (1877) 2 CPD 416

The plaintiff deposited a bag in a cloak-room at the defendants’ railway station. He received a paper ticket which read ‘See back’. On the other side were printed several clauses including “The company will not be responsible for any package exceeding the value of £10.” The plaintiff presented his ticket on the same day, but his bag could not be found. He claimed £24 10s. as the value of his bag, and the company pleaded the limitation clause in defence. In the Court of Appeal, Mellish LJ gave the following opinion:

• If the person receiving the ticket did not see or know that there was any writing on the ticket, he is not bound by the conditions;
• If he knew there was writing, and knew or believed that the writing contained conditions, then he is bound by the conditions;
• If he knew there was writing on the ticket, but did not know or believe that the writing contained conditions, nevertheless he would be bound, if the delivering of the ticket to him in such a manner that he could see there was writing upon it, was reasonable notice that the writing contained conditions.

Chappleton v Barry UDC [1940] 1 KB 531

Deck chairs were stacked by a notice asking the public who wished to use the deck chairs to get tickets and retain them for inspection. The plaintiff paid for two tickets for chairs, but did not read them. On the back of the ticket were printed words purporting to exempt the council from liability. The plaintiff was injured when a deck chair collapsed. The clause was held to be ineffective. The ticket was a mere receipt; its object was that the hirer might produce it to prove that he had paid and to show him how long he might use the chair. Slesser LJ pointed out that a person might sit in one of these chairs for an hour or two before an attendant came round to take his money and give him a receipt.

Olley v Marlborough Court [1949] 1 KB 532

The plaintiff booked in for a week’s stay at the defendants’ hotel. A stranger gained access to her room and stole her mink coat. There was a notice on the back of the bedroom door which stated that “the proprieters will not hold themselves responsible for articles lost or stolen unless handed to the manageress for safe custody.” The Court of Appeal held that the notice was not incorporated in the contract between the proprietors and the guest. The contract was made in the hall of the hotel before the plaintiff entered her bedroom and before she had an opportunity to see the notice.

Thompson v LMS Railway [1930] 1 KB 41

The plaintiff who could not read gave her niece the money to buy an excursion ticket. On the face of the ticket was printed “Excursion, For Conditions see back”; and on the back, “Issued subject to the conditions and regulations in the company’s time-tables and notices and excursion and other bills.” The conditions provided that excursion ticket holders should have no right of action against the company in respect of any injury, however caused. The plaintiff stepped out of a train before it reached the platform and was injured.

The trial judge left to the jury the question whether the defendants had taken reasonable steps to bring the conditions to the notice of the plaintiff. The jury found that they had not but the judge, nevertheless, entered judgment for the defendants. The Court of Appeal held that the judge was right. The Court thought that the verdict of the jury was probably based on the fact that the passenger had to make a considerable search to find the conditions; but that was no answer. Lord Hanworth MR said that anyone who took the ticket was conscious that there were some conditions and it was obvious that the company did not provide for the price of an excursion ticket what it provided for the usual fare. Having regard to the condition of education in this country, it was irrelevant that the plaintiff could not read.

McCutcheon v MacBrayne [1964] 1 WLR 125

Exclusion clauses were contained in 27 paragraphs of small print contained inside and outside a ferry booking office and in a ‘risk note’ which passengers sometimes signed. The exclusion clauses were held not to be incorporated. There was no course of conduct because there was no consistency of dealing.

Hollier v Rambler Motors [1972] 2 AB 71

The plaintiff had used the defendant garage three or four times over five years and on some occasions had signed a contract, which excluded the defendants from liability for damage by fire. On this occasion nothing was signed and the plaintiff’s car was badly damaged in a fire. It was held that there was not a regular course of dealing, therefore the defendants were liable. The court referred to Hardwick Game Farm v Suffolk Agricultural Poultry Producers Association (1969) in which more than 100 notices had been given over a period of three years, which did amount to a course of dealing.

British Crane Hire v Ipswich Plant Hire [1974] QB 303

Both parties were companies engaged in hiring out earth-moving equipment. The plaintiffs supplied a crane to the defendants on the basis of a telephone contract made quickly, without mentioning conditions of hire. The plaintiffs later sent a copy of their conditions but before the defendants could sign them, the crane sank in marshy ground. The conditions, which were similar to those used by all firms in the business, said that the hirer should indemnify the owner for all expenses in connection with use.

The court held that the terms would be incorporated into the contract, not by a course of dealing, but because there was a common understanding between the parties, who were in the same line of business, that any contract would be on these standard terms. The defendants were liable for the expense involved in recovering the crane.

Scruttons Ltd v Midland Silicones [1962] AC 446

A shipping company (the carrier) agreed to ship a drum of chemicals belonging to the plaintiffs. The contract of carriage limited the liability of the carrier for damage to £179 per package. The drum was damaged by the negligence of the defendants, a firm of stevedores, who had been engaged by the carriers to unload the ship. The plaintiffs sued the defendants in tort for the full extent of the damage, which amounted to £593. The defendants claimed the protection of the limitation clause. The House of Lords held in favour of the plaintiffs. The defendants were not parties to the contract of carriage and so they could not take advantage of the limitation clause.

Andrews v Hopkinson [1957] 1 QB 229

The plaintiff saw a car in the defendant’s garage, which the defendant described as follows: “It’s a good little bus. I would stake my life on it”. The plaintiff agreed to take it on hire-purchase and the defendant sold it to a finance company who made a h-p agreement with the plaintiff. When the car was delivered the plaintiff signed a note saying he was satisfied about its condition. Shortly afterwards, due to a defect in the steering, the car crashed. The plaintiff was stopped from suing the finance company because of the delivery note but he sued the defendant.

It was held that there was a collateral contract with the defendant who promised the car was in good condition and in return the plaintiff promised to make the h-p agreement. Therefore the defendant was liable.

B. INTERPRETATION

Baldry v Marshall [1925] 1 KB 260

The plaintiff asked the defendants, who were motor dealers, to supply a car that would be suitable for touring purposes. The defendants recommended a Bugatti, which the plaintiff bought. The written contract excluded the defendant’s liability for any “guarantee or warranty, statutory or otherwise”. The car turned out to be unsuitable for the plaintiff’s purposes, so he rejected it and sued to recover what he had paid.

The Court of Appeal held that the requirement that the car be suitable for touring was a condition. Since the clause did not exclude liability for breach of a condition, the plaintiff was not bound by it.

White v John Warwick [1953] 1 WLR 1285

The plaintiff hired a trademan’s cycle from the defendants. The written agreement stated that “Nothing in this agreement shall render the owners liable for any personal injury”. While the plaintiff was riding the cycle, the saddle tilted forward and he was injured. The defendants might have been liable in tort (for negligence) as well as in contract. The Court of Appeal held that the ambiguous wording out of the exclusion clause would effectively protect the defendants from their strict contractual liability, but it would not exempt them from liability in negligence.

Glynn v Margetson [1893] AC 351

Carriers agreed to take oranges from Malaga to Liverpool under a contract which allowed the ship to call at any port in Europe or Africa. The ship sailed 350 miles east from Malaga to pick up another cargo. When it arrived in Liverpool the oranges had gone bad. The defendants attempted to rely on an exclusion clause. The House of Lords held that the main purpose was to deliver a perishable cargo of oranges to Liverpool and in the light of this the wide words of the clause could be ignored and the ship could only call at ports en route. Therefore the carriers were liable.

Evans v Andrea Merzario [1976] 1 WLR 1078

The plaintiffs had imported machines from Italy for many years and for this purpose they used the services of the defendants, who were forwarding agents. The plaintiffs were orally promised by the defendants that their goods would continue to be stowed below deck. On one occasion, the plaintiff’s container was stored on deck and it was lost when it slid overboard.

The Court of Appeal held that the defendants could not rely on an exemption clause contained in the standard conditions of the forwarding trade, on which the parties had contracted, because it was repugnant to the oral promise that had been given. The oral assurance that goods would be carried inside the ship was part of the contract and was held to override the written exclusion clause.

C. THE UNFAIR CONTRACT TERMS ACT 1977

Peter Symmons & Co v Cook (1981) 131 NLJ 758

The plaintiff firm of surveyors bought a second-hand Rolls Royce from the defendants which developed serious defects after 2,000. It was held that the firm was acting as a consumer and that to buy in the course of a business ‘the buying of cars must form at the very least an integral part of the buyer’s business or a necessary incidental thereto’. It was emphasised that only in those circumstances could the buyer be said to be on equal footing with his seller in terms of bargaining strength.

R & B Customs Brokers v United Dominion Trusts Ltd [1988] 1 WLR 321

The plaintiff company, which was a shipping agency, bought a car for a director to be used in business and private use. It had bought cars once or twice before. The sale was arranged by the defendant finance company. The contract excluded the implied conditions about merchantable quality. The car leaked badly.

It was held by the Court of Appeal that where a transaction was only incidental to a business activity, a degree of regularity was required before a transaction could be said to be an integral part of the business carried on and so entered into in the course of that business. Since here the car was only the second or third vehicle acquired by the plaintiffs, there was not a sufficient degree of regularity capable of establishing that the contract was anything more than part of a consumer transaction. Therefore, this was a consumer sale and the implied conditions could not be excluded.

Phillips Products v Hyland [1987] 1 WLR 659

The plaintiff hired an excavator from the second defendants on the latter’s standard terms which provided that the driver should be regarded as employed by the plaintiff, the plaintiff thereby remaining liable for any loss arising from the machine’s use. The driver negligently damaged the plaintiff’s factory whilst carrying out work at the plaintiff’s request.

It was held that several factors meant that the clause failed to pass the reasonableness test: (1) the plaintiff did not regularly hire machinery of this sort whereas the defendants were in the business of equipment hire. (2) the clause was not the product of any negotiation between the parties: rather it was simply one of the defendant’s 43 standard conditions. (3) the hire period was very short and the plaintiff had no opportunity to arrange insurance cover. (4) the plaintiff played no part in the selection of the driver and had no control over the way in which he performed his job.