Business Law

Topics: Contract, Contract law, Contractual term Pages: 8 (2029 words) Published: April 11, 2013
(B) Whether or not taken reasonable steps to notify the other party of this exemption clause?

1. The term excluding liability must be notified to the other party prior to that party acceptance.

Olley v. Marlborough Court Ltd. (1949), a notice in Olley’s bedroom stated that the hotel proprietor would not be liable for theft of guest’s property. It was held that this exclusion clause was not incorporated into the contract (i.e. invalid) because it was notified to Olley after the conclusion of the contract (contract was formed at the reception desk, not in the bedroom!).

(The court of Appeal said that the exemption clause in the notice was not included in the contract. The contract had already been made at the reception downstairs – the exemption clause was brought to her attention too late to be incorporated into the contract.

Whether there was incorporation of the exemption clause?

In Thornton v. Shoe Lane Parking (1971), a notice printed on the ticket dispensed from the automatic barrier at the car park entrance stated that the proprietors would not be liable for injuries to customers. It was held that the exclusion clause did not form part of the contract because the contract was formed when the car driving along the machine at the car park entrance (not at the time when the ticket was dispensed)

Thornton v. Shoe Lane Parking – exemption clause print at the back of the ticket came after the contract was formed between two parties. It was too late to be incorporated into the contract. No notice was drawn to those clauses at the time.

To be an effective disclaimer, the notice should be displayed at the car park entrance before the driver drives his car into the car park. Thornton entered into contract with Shoe Lane Parking—no effective incorporation.

(Describe situation e.g. it was too late, no effective incorporation by the way/ effective incorporation)

So, No, exemption clause not incorporated.

2. Take reasonable steps to draw it to the customer’s attention. For contract without signature

Chapelton v Barry UDC(1940,CA)

The plaintiff hired a deck chair from the defendant’s employee. When he paid, the plaintiff was given a ticket. On the back of the ticket which state that “UDC will not be liable for any accident or damage arising from the hire of the chair .Plaintiff claimed damages for his personal injury.

The ticket was held not to be a contractual document but seemed to be more than a receipt of payment.

So, (describe situation), is sufficient/insufficient notice

So, exemption clause incorporate/ not incorporate

-->Sign printed at the back of the bus ticket.

(From time to time in consistent terms)

Whether there was incorporation of the exemption clause?

C) Consistent prior course of dealings


In Kendall v. Lillico (1968) the parties had contracted 100 times in the previous three years on consistent terms. Therefore, they had adequate notice of the exemption clause in a ‘sold note’ to exclude seller’s breach.

->100 times in previous 3 years on same terms.

(Describe situation, even though no sufficient information provided, could infer from the wording ‘from time to time that XXX was making sufficient prior course of dealings and it was possible that ... on the same terms in previous course of dealings, this may amount to Consistent prior course of dealings”)

Exemption clause incorporated


In McCutcheon v. David McBrayne Ltd. (1964), the claimant had shipped his car on the defendant’s ferry. Sometimes he had been asked to sign a risk note with a clause exempting the ferry company from liability for damage to goods. On one occasion, when a risk note had not been supplied, the ferry sank due to the defendant’s negligence and the claimant’s car was lost. It was held that the exclusion clause was not valid as the claimant had no notice of the exemption. The previous dealings were not consistent as risk notes had not...
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