#17247 - Incorporation Of Derogating Terms - GDL Contract Law

Reduce a party’s obligations by exclusion/limitation etc.

Incorporation by Signature:

• L’Estrange v Graucob [1934] – sales agreement for vending machine excluded any terms not written into contract. Held that regardless of whether plantiff had read contract, her signature was binding.

• Canadian limitation on L’Estrange Principle in Tilden v Clendinning Rent-A-Car (1978) - did not apply where it was or should have been clear that the customer had not read the contract and was not aware of the burdens it imposed.

Exceptions to incorporation by signature:

• Where the document has no contractual effect:

  • Grogan v Robin Meredith Plant Hire [1996] – Meredith had an oral contract for hire of machinery. Sought to rely on time sheet signed by company which mentioned hire terms. Held this was not a contractually effective document.

• Where there has been a misrepresentations:

  • Curtis v Chemical Cleaning [1951] – dry cleaner stated that they were exempting themselves from damage caused to beads or sequins on wedding dress. In fact, contract excluded all liability for any damage. P received stained dress and sued for damages.

    • CA: Denning LJ held that the defendants were not entitled to rely on the clause. It operated only to the extent which they had represented.

    • Unorthodox – clause ought to be effective or not. The idea that it is effective but only to the represented extent resembles an estoppel.

Incorporation by Reasonable Notice

• Notice must be given before or at the time the contract is formed. If it is given only after the moment of contracting, then it is invalid.

  • Olley v Marlborough Court Hotel [1949] – valuables were stolen from plaintiffs’ room. Notice exempting hotel for loss of valuables in rooms. Held that as contract was signed at desk, signs in room were too late.

  • Thornton v Shoe Lane Parking Ltd [1971] – parking machine printed exemption clauses on the back of tickets. Thornton did not receive the ticket until after the contract had been concluded.

• Must been contained in a document that could reasonably be expected to contain contractual terms.

  • Grogan above.

  • Chapelton v Barry UDC [1940] – receipt for deck chair hire had exemption clause on the back. Plaintiff injured on chair. Held that as offer/acceptance occurred before ticket was issued the ticket did not have contractual effect.

  • British Crane Hire v Ipswich Plant Hire [1975] – crane hired sank into a marsh. Term that risk remained with hirer was not expressly incorporated. But both companies were in the plant hire industry, this was a common term, and parties had contracted twice before.

    • Held that term was implied as part of consistent course of dealing.

  • Denning MR: “The judicial task is not to discover the actual intentions of each party; it is to decide what each was reasonably entitled to assume from the attitude of the other”

• Reasonable steps must be taken to bring the notice to the other party’s attention:

  • Parker v South Eastern Railway (1877) – SE printed term on back of ticket limiting liability for lost items to 10. The question was whether this was sufficient notice (deemed yes on retrial)

  • Thompson v London, Midland and Scottish Railway [1930] – railway had signs and leaflets excluding liability for injury. Illiterate woman was injured. Despite jury finding that insufficient steps had been taken Judge and CA found for D, reasonable steps taken.

  • Note ticket cases are problematic in terms of timing: One would think tendering money is offer and ticket is acceptance.

    • In fact in order to incorporate terms effectively, issue of ticket is offer which customer can than accept or reject. Logic here yields to the superior practical interest of enabling service industry to run on its own terms.

• Onerous or unsual terms require greater attention to be drawn to them:

  • Denning LJ: “Some clauses which I have seen would need to be printed in red ink on the face of the document...