However, it is likely that Paul may argue that he has used this receipt for all his dealings and relied on it, since Robert and Lucy went to the ballroom dance classes at the same club some time ago. In Spurling v Bradshaw, it was held that the implied knowledge of the clause was assumed and thus effective because a similar document had been supplied in previous contract. In McCutcheon v MacBrayne, it was held that the dealings between the parties must be consistent for the clause to be effective. In our case, Robert and Lucy joined ballroom dance class previously but now they are joining a different Salsa dance. Moreover, it is likely that they did not book the class in advance for ballroom dance class as it is not stated in the facts that ballroom dance class is popular. Therefore, the course of dealing was inconsistent.
In Olley v Marlborough Court, it was held that an exemption clause displayed in a hotel bedroom was held not to be incorporated, since the contract had been made the reception desk. Therefore, the clause must have been put forward before, or at the time, the contract was made to be effective. If it is introduced later, then it cannot be part of the contract. This case is in pari materia with our case, as the notice is displayed inside of the club door and that the contract had been made as Robert and Lucy booked the classes in advance. Therefore, the notice is held to be ineffective.
3.2 Rules of Construction
The next issue to consider, assuming that the clause is incorporated, is whether the clause covers the breach. The approach to construction is the contra proferentem rule which any ambiguity will nevertheless be construed against the person relying on that clause. In White v John Warwick, it was held that the phrase ‘nothing shall render the owners liable’ referred only to strict liability under the contract, not to liability to negligence. Moreover, in Hollier v Rambler, it was held that in any event, the language of this clause did not exclude liability for the defendants’ negligence unless adequate words are used. In our case, the notice reads, ‘the club will not accept responsibility to any loss suffered under contract’ but did not explicitly specify what responsibility is covered, thereby not including negligence. Therefore, the notice would not cover liability as a result of negligence.
3.3 UCTA
The next issue is to consider the enforceability of UCTA. Section 2(1) of UCTA restricts the ability to exclude business liability for negligence in relation to personal injuries although it is indisputable that Paul’s negligence in falling over broke Robert’s arm. Therefore, Paul cannot rely on any clauses and that Robert can sue for damages.
Section 2(2) further provides that in the case of ‘other loss or damage’, a person cannot exclude or restrict his liability for negligence except insofar as the term or notice satisfies the test of reasonableness. In determining reasonableness, the guidelines are given in the 2nd Schedule of the UCTA.
Firstly, it is relevant to consider the strength of the bargaining positions of the parties. Secondly, it is relevant whether Robert and Lucy had an opportunity of entering into a similar contract with other providers of Salsa dancing without having to accept a similar term. Due to the popularity of the Salsa class, it is arguable that Robert and Lucy has less bargaining powers as they have to book the class in advance and there was no other classes of a cheaper or more expensive price.
Thirdly, reasonableness also takes into account the question of whether Robert and Lucy knew or ought reasonably to have known of the existence and extent of the term. In AEG(UK) Ltd v Logic Resource Ltd, it was held that to satisfy the reasonableness requirement, the defendants need to know or ought reasonably to have known the term, irrespective of the fact that the clause had been incorporated as a term. As stated in the case, it is reasonable to ascertain that Robert and Lucy were not given sufficient attention to the clause and notice in the contract. Therefore, they would not have known or reasonably ought to have known the clause or notice. Applying these three guidelines to our case, the exemption clause is thereby unfair and unreasonable.
3.4 UTCCR
The final issue is to consider UTCCR on the fairness and reasonableness of the contract. Paul is the business ‘supplier’ and Robert and Lucy are the ‘consumers’ defined in regulation 3(1). The definition of the four elements in ‘unfair term’ is defined in Regulation 5(1) which provides that:
‘ A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer.’
Applying the first element, the contract terms are not individually negotiated as the clause and notice in the case has been drafted in advance.
The second element is stated in Director General of Fair Trade v First National Bank plc, in which it was held that good faith is the “good standards of commercial morality and practice” and the test of unfairness applying UTTCR section 2 in the contract. It is possible that the contract was not held in good faith as Paul did not contemplated the possibilities of injuries and insurance to be included in the contract. Moreover, it was not stated in the clause or notice that Robert and Lucy should purchase their own insurance policy before the commencement of their lessons.
The third element is ‘significant imbalance’ concept focuses on the substantive features of the term. A possible argument regarding the obligation for Paul to Robert and Lucy is to take reasonable care not to cause any injury and if any injury is caused, there ought to be a coverage of insurance as Robert and Lucy had paid for the Salsa dance course. Moreover, Robert and Lucy had the rights to know of the dangers or injuries involved in Salsa dancing as it is reasonable for the dance to be safe.
Applying the fourth element, the lack of knowledge in contemplation of the injuries or dangers involved would be detrimental to Robert and Lucy. It is likely that Robert and Lucy would have reconsidered if they knew of the dangers involved or would have bought insurance before attending the Salsa classes. Moreover, Lucy would not have left her coat in the cloakroom if there is a possibility that the coat could be stolen.
Applying all the four elements into the case, it is thereby likely that the clause and notice is contrary to UTCCR and therefore not binding on Robert or Lucy.
4.0 Conclusion
In conclusion, Robert and Lucy have a high chance to claim damages as it is likely that the clause and notice are invalidated due to the method of incorporation and rules of construction. Paul strongest ground for defense in the case is that the clause and notice have been reasonably contemplated due to past dealings. However this argument would not stand as there were inconsistencies on the form and substance of the dealings. Notwithstanding the above, UCTA applies on bodily injuries and therefore Robert can definitely claim damages on the broken arm. Moreover, negligence is not included in the notice so it is likely that Robert could claim damages on the watch. It is likely that the loss of Lucy’s coat is not covered under UCTA but the effect of UCTTR will render Paul liable for the damages.
ibid. Lord Bingham para 17
