A clause may be inserted into a contract, which aims to exclude or limit a party's liability for breach of contract or negligence.

     The judge in the cases of Robert and Lucy would therefore have to decide, upon the facts of the case, whether the conditions had been brought to their attention, and whether or not they knew of these conditions when they were given the receipt.  If they were aware of the writing, “I have no doubt that the party receiving the paper does, by receiving and keeping it, assent to the conditions contained in it, although he does not read them, and does not know what they are.”[1]  In his judgement Mellish LJ also considered whether the reasonable person would acknowledge that written conditions may be included in the receipt.

     However, rather more rigid is the judgement in ‘Chappleton v Barry UDC (1940)’ which seems to assume that a ticket is merely a voucher of receipt that follows the completion of the contract.  In this case deck chairs were stacked by a notice asking the public to retain tickets for inspection.  The plaintiff bought two tickets but did not read them.  On the back of this ticket there was an attempt at exempting the council from liability, but this clause was held to be ineffective when the plaintiff was injured when his chair collapsed.  Slesser LJ held that the ticket was a ‘mere receipt,’ only to be produced as proof of payment.  Therefore, if Lucy and Robert were to follow this case, then the written conditions referred to on their receipt would not be incorporated into their contract conditions.  It may also be noted that as the receipt is given only after offer and acceptance has taken place, this may be too late to attempt to include the clause into their contract.

     The second requirement for ‘reasonable and sufficient’ notice of the existence of the exclusion clause is the requirement that the clause be brought to the notice of the other party ‘before or at the time the contract is entered into.’ This requirement is highlighted in the case on ‘Olley v Marlborough court (1949).’ The plaintiff here was staying in a hotel in which there was a notice on the back of the bedroom door stating ‘The proprietors will not hold themselves responsible for articles lost or stolen unless handed to the manager for safety.’  The Court of Appeal held that the notice was not incorporated into the contract as this was made before the plaintiff entered her bedroom, before she had an opportunity to see the notice.  If we were to follow the judgement her then it may be concluded that the printed receipt stating ‘see notices inside the club’ may not be sufficient notice as the notice is pinned up on the inside of the club door.  It would supposedly depend upon the time in which Lucy and Robert were made aware of this condition.  If it was after the completion of the contract then it could not be said to be incorporated.  However, it must also be noted that ‘reasonable’ not actual notice is required here, as in ‘Thompson v LMS Railway (1930)’.  The judge on this case asserted that reasonableness was a question of fact depending on the circumstances of the parties.  If we consider the facts in the case of Robert and Lucy, I would conclude that although their notice may not be deemed to be ‘actual’ notice of the conditions, it may have been reasonable.  

    It may also have to be considered whether the gravity or unusualness of the clause has any significance here, as in ‘Thornton V Shoe Lane Parking (1971)’, where it was held that the small print on the back of the ticket was insufficient in the circumstances.  In ‘Spurling V Bradshaw (1956)’, Lord Denning asserted that ‘Some clauses which I have seen would need to be printed in red ink with a red hand pointing to it before the notice could be held to be sufficient.’ However, I do not feel that the clause made by the dance club is especially unusual, therefore this may not apply.

     If it was decided that there had been insufficient notice, the defendants may argue that there had been a previous consistent course of dealing between the parties on the same terms, which may effectively incorporate there terms into the contract.  It was held in the case of ‘Spurling V Bradshaw(1956)’ that even though the exclusion clause was not brought to the attention of the plaintiffs until after the contract had been concluded, the fact that there had been a regular course of dealings between the parties meant that the clause had been incorporated.  ‘The test should be whether, at the time of contracting, each party, as a reasonable person, is entitled to infer from the past dealings and the actions and words of the other in the instant case, that the standard clauses are part of the instant contract.’[2]  The fact that Robert and Lucy ‘used to go to ballroom dance classes at the same club some years ago’ may mean that this course of dealings was enough to incorporate the exclusion clause into their contract.  However, the decision in ‘Mc Cutcheon V David MacBrayne Ltd’ seems to suggest otherwise, and possibly that because their dealings were ‘some time ago’ this does not indicate a ‘consistent course of dealings,’ in which Lord Reid found necessary.  As well as this it cannot be said to be a consistent course of dealings as in this instance they had ‘booked classes in advance’ which seemingly suggests that this had not been the case in previous dealings.  A considerable number of past transactions may be required as this clause is against a private consumer.  ‘Hollier v Rambler Motors (1972)’ where the court referred to ‘Hardwick Game Farm V Suffolk Agricultural Poultry Producers Association (1969) where more than a hundred noticed over 3 years did amount to a course of dealing.  However, this rule may have been relaxed since the introduction of the ‘Unfair Contract Terms Act’ in 1977, as the common law beforehand sought to restrict the unfair bargaining power of the business party, for which legislation on this matter now succeeds, meaning the courts may relax the undue protection given to consumers.

     In the instance that this clause is, in fact, effectively incorporated, the contract would then be construed by the court to determine whether the clause actually covers the breach.  There are a number of ‘rules’ that can be used in doing this, firstly, the most basic approach being the ‘Contra Proferentem’ rule.  This means that in the instance of any ambiguity in the meaning of the clause in question, the court will interpret it against the party who inserted it into the contract.  In ‘Hollier V Rambler Motors (1972)’ Salmon LJ stated “to my mind, if the defendants were seeking to exclude their responsibility for a fire caused by their own negligence, they ought to have done so in far plainer language than the language here used.”[3]  It could be said that the exclusion clause, “The club will not accept responsibility for any loss suffered by customers” is quite ambiguous, and it is not clear whether the loss of Lucy’s coat, and even more so, the damaging of Robert’s watch, and also his personal injury, would be covered by the term ‘any loss.’ Can a broken arm be considered ‘a loss’? Due to this ambiguous and unclear term, the courts may decide to construe it contra Proferentem.  

     The particular issue that may be relevant here is that of liability of the club for negligence. Robert may argue here that the clause stating ‘any loss’ only applies to the loss of Lucy’s coat and the damage to his watch. However, he may argue that this does not cover his personal injury, which he may blame on the negligence of the dance instructor. Very clear words are needed to exclude their liability for negligence, ‘White v John Warwick (1953).  In this case the court of Appeal held that the exclusion clause would not exempt the defendants from liability in negligence.  The Canadian case of ‘Canada Steamship Lines Ltd v R (1952)’ sets out a three stage test for the exclusion of negligence.  The first stage of this test asks whether the clause contains language which expressly exempts the person in whose favour it is made.  The clause here does not expressly exempt the club from liability in negligence.  The second stage of the test would thus be considered, i.e. the court must consider whether, in their ordinary meaning, the words used are wide enough to encompass negligence.  If there is any doubt at this point then it must be resolved against the party whose favour it is made.  I would conclude here that the words of the clause ‘Any loss suffered by customers’ are not sufficiently wide enough to cover negligence, therefore it would probably be resolved against the club in this instance. 

It may now be necessary to consider the legislation in this area.  The purpose of the Unfair Contract Terms Act 1977 was to restrict the extent to which liability for breach of contract and negligence can be excluded from a contract.  There are certain situations to which UCTA applies, and this is only when there is ‘business liability.’  This will therefore be relevant to Robert and Lucy as their dealings with the dance club are covered by section 1(3) (a) ‘from things done or to be done by a person in the course of a business (whether his own business or another's)’.  Most importantly here is section 2 of the Act, which considers negligent liability.  If it was determined that Paul had acted negligently in demonstrating ‘an energetic step’ and falling over, then his liability for the personal injury to Robert resulting from his negligence ‘cannot be excluded or restricted by any contract term or notice (S.2(1)).  Thus, if the clause in the dance club attempted to have this effect it would be invalid, making the club liable for such personal injury.   The exclusion of negligent liability for the damage to his watch, however, may be permissible if the term or notice satisfies the ‘reasonableness’ test required under the Act.  Section 11 (1) sets out that for the term to be considered ‘reasonable’ it must have been a fair and reasonable term, included ‘having regard to the circumstances which were, or ought reasonably to have been, known to or in the contemplation of the parties when the contract was made.’[4]  This will be assessed with reference to what the parties could be expected to know, it will act in favour of Robert, as he is the party with the weaker bargaining power.  It is also more likely to be deemed reasonable if Robert could have insured himself against such a risk. If it is decided that the term in the notice satisfies this requirement, then the dance club will be able to exempt their liability for negligence relating to the damage caused to Robert’s watch.

In conclusion to this I feel that the main strength of the argument to be put forward by the plaintiffs would be that due to the timing of the notice, and the fact that they were not made aware of this clause at the time that the contract was formed, as reasonably sufficient notice of the clause had not been given, this cannot be said to be incorporated.  The contract was made on the terms of the offer, which was accepted, not including the knowledge of the exclusion clause.  It cannot be said, beyond doubt that there was a consistent course of dealing between the parties.