Exclusion Clauses - Incorporation and Interpretation

Incorporation

In the past the courts have kept a more commercial attitudes. permitting exclusion clauses. However, societal changes have really pushed a new approach courts have. The case below is an example;


 Thompson v LMS Railway 1930

The claimant was injured whilst stepping off a train. The railway company displayed prominent notices on the platforms excluding liability personal injury and damage to property due to negligence. The tickets also stated they were subject to terms and conditions displayed on the platform. The claimant was illiterate and could not read the signs. She argued that the exclusion clause was not incorporated into the contract as the railway company had not brought the clause to her attention at the time the contract was made.

Held:

The clause was incorporated. There is only a requirement to take reasonable steps to bring the clause to the attention of a reasonable person. There was no duty to ensure that every traveller was aware of the clause. The claimant was therefore unsuccessful in her claim for damages.

Furthermore, although as we will see courts are more reluctant to permit standard form exclusion clauses, it still holds true that being illiterate, ignorance to the law, is not an excuse for the law. If you don't read the clause or are illiterate that is not sufficient ground to argue it is unincorporated. 


Olley v Marlborough Court 1949

The claimant booked into a hotel. In the hotel room on the back of the door a notice sought to exclude liability of the hotel proprietors for any lost, stolen or damaged property. The claimant had her fur coat stolen because the receptionist was negligent leaving the door keys out. 

Held:

The notice was ineffective. The contract had already been made by the time the claimant had seen the notice. It did not therefore form part of the contract.

Thorton v Shoe Lane Parking 1971

The claimant was injured in a car park partly due to the defendant's negligence. The claimant was given a ticket on entering the car park after putting money into a machine. The ticket stated the contract of parking was subject to terms and conditions which were displayed on the inside of the car park. One of the terms excluded liability for personal injuries arising through negligence. 

Held:

The machine itself constituted the offer. The acceptance was by putting the money into the machine. The ticket was dispensed after the acceptance took place and therefore the clause was not incorporated into the contract, lack of reasonable notice.

Chapelton v Barry UDC [1940] 

A man rented two deck chairs and was given a ticket. He couldn’t negotiate the terms, he fell through the deck chair. However, there was an exemption clause exemption the deck chairs.


Held;

courts said that it wasn’t reasonable to expect this kind of contractual agreement. Furthermore, neither party intended the ticket to be contractually binding, it was a mere receipt. 

Interpretation 

In common law the Contra Proferentem rule is used.

• This is where you interpret contract against the person who wrote it. You recognise the person who has been injured did not negotiate that clause.  Courts use every method to interpret the clause so it doesn't affect the person who is injured.

Wallis Sons Wells v Pratt Haynes 1911

A seed sale contract clause said the sellers gave ‘no warranty express or implied’ as to the seeds’ description. The seeds did not match the description.

 Held, that the clause only applied to a warranty, and the description was actually a condition of the contract.

JOHN LEE & SON (GRANTHAM) LTD v. RAILWAY EXECUTIVE 1949

Goods stored in a railway warehouse let to a tenant were damaged by fire and the tenant brought an action against the railway executive alleging that the accident was due to their negligence because a spark ejected from their railway engine had caused the fire. The defendants set up a clause in the tenancy agreement which exempted them for loss of or damage to property however caused (whether by act or neglect of the company or their servants or agents or not) which "but for the tenancy hereby created would not have arisen".

The company was liable. The words "but the tenancy hereby created" were confined to liabilities which arose reason of the relationship of landlord and tenant.