Despite the substantiated argument that the clause was not incorporated into the contract, we must not ignore two important factors. The first being that Lucy and Robert booked the classes in advance and the second being, the existence of a previous contract between the two parties. Both these factors help us analyse whether or not Lucy and Robert were given ‘reasonably sufficient notice’ of the clause. In the case of Alexander v Railway Executive [1951] the court concluded that “most people nowadays” were aware of the types of services that would be subject to conditions. It may be suggested, particularly in light of the two parties prior contract, that as in the case of British Crane Hire Corporation v Ipswich Plant Hire Ltd [1975], Robert and Lucy should have known of the club’s terms and conditions from their previous course of classes. However the distinguishing fact between the case of British Crane Hire and our clients’ case is the two types of parties involved. The contract formed in the former case was one between two businesses of equal bargaining power. Robert and Lucy’s case is fundamentally different in that the contract was formed between consumers and a business. We can see that Robert and Lucy’s case is much more similar to Hollier v Ramble Motors (AMC) Ltd [1972]. The Court of Appeal decided that despite the consumer having used the services of the business on three or four previous occasions “this was not a sufficient course of dealing”. This was mainly because of the unequal bargaining power of the two parties and the use of a standard form contract that attempted to employ the use of an exemption clause against the customer. Therefore the clause was not seen to have been incorporated into the contract. I think it is more probable the courts would follow the judgement in the case just illustrated than the case of British Crane Hire Corporation v Ipswich Plant Hire Ltd, as the facts are more similar.
It would also be relevant in Lucy and Robert’s case to apply the general test Mellish LJ applied in Parker v South Eastern Railway Co to give further clarification of incorporation. Mellish LJ stated:
“That 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; that if he knew there was writing, and knew or believed that the writing contained conditions, then he is bound by the conditions; that 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.”
Evidently we only have limited facts about Lucy and Robert’s case but we are aware that the printed instruction appeared ‘on the back of the receipt’ which could provide the basis for Lucy and Robert’s claim that they “did not see or know that there was any writing on the ticket”. Therefore they should not be bound by the exemption clause.
Nevertheless we cannot conclude either way, with this short description of events, whether or not Lucy and Robert were aware of the conditions of the club and aware of the fact they were printed on their ticket. If they did know of the club’s exemption clause it would be better to argue their case not on the basis of incorporation but on the construction of the clause. The clause under examination is as follows “The club will not accept responsibility for any loss suffered by customers”. Lord Reid stated in the case of L Schuler A G v Wickman Machine Tools Sales Ltd [1974] that the party relying on the exemption clause should make their intentions “abundantly clear”. The club used the word “loss” in their clause but what was the intention behind the clause? It could be said that the club was referring to material loss as in the loss of possessions such as Lucy’s coat, on the other hand they may have meant the loss of the use of a limb as in Robert’s broken arm. Finally, can the damaged Rolex watch be deemed as a “loss”? The watch is still present albeit broken yet Robert has lost the time-keeping function of his watch. We can see how ambiguous the wording of exemption clauses can be. The courts developed the ‘contra proferentum’ rule to protect the consumer against the ambiguity of such contractual clauses, to the extent that the clause will be interpreted to the detriment of the party attempting to rely on it.
This rule has subsequently been entrenched by the recently legislated Unfair Terms in Consumer Contracts Regulations 1999. Essentially both the 1999 Regulations and the Unfair Contract Terms Act 1977 go someway to ensure that businesses cannot legally place all the risk upon their customers by way of a broad, ambiguous exemption clause like the one employed by the dance club. In fact the legislation positively takes the view that ‘the use of unclear language may be seen as indicative of unfairness’. It certainly would be very difficult for the club to rely on that one clause to protect them from liability for the stolen coat; Robert’s broken arm and the irreparably damaged Rolex watch.
The legislation cited previously, examines negligence in respect of exemption clauses and has developed a test, which can be applied to the clause in question, to determine if it covers acts of negligence. It could be argued that as a professional dance instructor Paul owed his customers a ‘duty of care’ whilst demonstrating the dance steps. The fact he fell and injured one of his members may indicate an element of carelessness and a slip of the high standard expected of a professional resulting in negligence. Similarly we can not be sure that the club exerted its obligatory ‘duty of care’ whilst in the possession of Lucy’s coat. In order to establish if the club is protected from the results of negligent acts, we must apply the aforementioned test. Firstly we must establish if negligence is referred to specifically in the clause. In Robert and Lucy’s case there is no mention of excluding liability in respect of negligent acts. The second step is to ask whether or not the words are sufficiently broad to protect from liability as a result of negligence. We can only assume that the words of the club’s clause are wide enough to cover negligence as the type of loss is not specified and loss could easily be the result of a negligent act. However the third aspect of the test dictates that if the clause could be interpreted as covering any other liability apart from that that arose from negligence, the clause will be seen to protect only against the non-negligent liability. The clause the club tried to incorporate into the contract with Robert and Lucy clearly does not cover negligent liability by virtue of the fact it does not specifically refer to negligence and negligence only.
In examining Robert and Lucy’s case I have tried to demonstrate the path of legal principles that may have relevance to this case. More facts are needed from Lucy and Robert, and issues such as remoteness of damages could also be explored but purely on the basis of the question I would return to the original discussion of incorporation. I believe that the facts of Robert and Lucy’s case are most akin to the facts of Parker v South Eastern Railway Co Ltd and Thornton v Shoe Lane Parking in 1971. The former case maintained that a ‘mere’ receipt upon which a reasonable person would not expect to find terms, cannot be considered as a contractual document and the consumer would not be bound by the conditions outlined on its reverse. The latter case went on to establish that a contract is formed at the point of payment and a ticket or receipt received after the transaction has been made can not then introduce new terms into that contract. On the basis of this argument I would advise Lucy and Robert that the exemption clause had not been incorporated into the contract between themselves and the dance club. I would therefore advise them to claim against the club for Robert’s injury, Lucy’s stolen coat and the damaged watch.
References:
Books used:
The Law of Contract – Koffman & Macdonald (4th edition)
Casebook on Contract Law – Jill Poole (5th edition)
Databases used:
LexisNexis
The Law of Contract by Koffman & Macdonald p. 146
Casebook on Contract Law by Jill Poole p. 293
The Law of Contract by Koffman & Macdonald p. 151
The Law of Contract by Koffman & Macdonald p. 162
