Titile: Business Law, the Laws Applied in This Case Study

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Titile: Business Law, the laws applied in this case study

Introduction

Funster had suffered three forms of losses in this factual matrix, namely the broken ribs, the damaged iPhone and the torn T-shirt. Prima facie, Magic Studios is liable for the negligent damage caused to Funster. Therefore, whether Magic Studios should bear liability for the damage hinges upon whether they can successfully rely upon the exclusion clause set out in the ticket. The approach taken by the courts on determining the applicability of the exclusion clause is neatly set out in Press Automation Technology v Trans-Link Exhibition Forwarding [2003] 1 SLR 712. A court will first determine whether the clause is successfully incorporated, before applying the common law principles of construction to determine if it can be enforced. Following that, it will then apply the Unfair Contract Terms Act [UCTA] to determine if the clause can indeed be struck out by statute. Each point of law will be discussed in turn.

Incorporation

Two issues regarding the incorporation of a term arise in this case. The first is whether the term has been incorporated before the formation of the contract, and the second is whether there has been reasonable notice on Monster Studio’s part. Both issues will be discussed consecutively.

On the first issue of incorporation before formation of the contract, the law is clear that terms should be incorporated into the contract before formation (Thornton v Shoe Lane Parking, [1971] 2 QB 163) [Thornton]. The terms and conditions of a contract should be well known to both parties before they are made to bear legal responsibilities under the contract. Therefore, the notice of a ticket must come before its formation. Elsewise, it will not be enforceable.

In this case, it is likely that a court will decide that the term has been incorporated before offer and acceptance. This is because Magic Studios has clearly placed a sign above the ticket booth that certain terms and conditions will apply. Funster thus entered into the contract knowing that certain terms will apply to the transaction. In conclusion, the term would thus be properly incorporated into the contract.

On the second issue of reasonable notice, the applicable law is clearly set out in the landmark English case of Parker v South Eastern Railway Co (1877) 2 CPD 416 [Parker] that the recipient of a ticket is bound if “he had reasonable notice that the document contains terms”, even if he remains ignorant of the terms. This means that the term can be incorporated into the contract only if it is reasonable that an ordinary person would have noticed the existence of such a term. The law in Parker was further clarified in Thornton that where the court held that if the party seeks to enforce an onerous term, it must take additional steps to bring its presence to the other party’s notice.

In this case, it is clear that Magic Studios should be deemed as having successfully incorporated the exclusion clause. By using an obvious red font, it had clearly brought to any customer’s attention that there are underlying terms and conditions on the ticket. In any case, Funster had consulted an attendant about the exclusion clause and cannot claim that he does not know of such an underlying term.

In conclusion, by applying the clear rules set out in Parker and Thornton, the exclusion clause should be successfully incorporated.

Common law principles of construction

Following the successful incorporation of the exclusion clause, the next issue is whether the clause can be enforceable by applying the common law principles of construction.

As held clearly in Emjay Enterprises Pte Ltd v Skylift Consolidator, [2006] 2 SLR(R) 268, the rule of construction approach will be taken in Singapore where exclusion clauses are concerned. Following the landmark decision in The Suisse...
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