Exemption clauses – Olley v Marlborough Court Ltd

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The case law on exemption clauses can seem confusing and is further complicated by the Unfair Contract Terms Act 1977. A systematic approach to analysis helps.

First, consider whether the term in question is part of the contract at all. Such terms are often in documents (receipts, notices etc.) which may not be incorporated into the contract. If they are unusual or particularly onerous terms, they may need to be highlighted in some way. The following cases are examples of where limitation or exemption clauses have been held not to be contractual terms.

Too late

Olley v Marlborough Court Ltd

[1949] 1 KB 532 (CA)

Facts

C checked into D’s hotel, and went to her room. On the wall was a notice excluding D’s liability for lost or stolen property. C’s coat was stolen, and she sued the hotel. D was unable to rely on the exemption clause as a defence, as C was not made aware of the clause until after the contract was formed.

Rule

A term of a contract is only incorporated if parties are aware of it before the contract is formed.

Too obscure

Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd

[1987] EWCA Civ 6 (CA)

Facts

D hired transparencies from C for a period. In the delivery note was a late delivery charge of £5 per transparency per day, of which D was unaware. D exceeded the hire period by a few days and was fined in excess of £3700. C sued D. C was not awarded the full amount, but a reasonable charge on a quantum meruit basis.

Rule

If a party wishes to enforce an onerous express term in a contract, reasonable notice of the term must have been given to the other party. To be reasonable, such notice must be very explicit.

In an unexpected place

Chapelton v Barry Urban District Council

[1940] 1 KB 532 (CA)

Facts

C hired a deckchair from D and was given a small ticket as a receipt. On the back of the ticket was an exclusion clause. C was injured and sued D. D was unable to plead the exemption clause as a defence, as the ticket in this instance was not something that would be expected to contain contractual terms, as it appeared to be a mere receipt.

Rule

An exemption clause will only be incorporated if it appears on a document which can reasonably be expected to form part of a contract.

There are many other cases about exemption clauses: revisit the CaseLawCracker blog regularly for more case law tips.

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Negotiation waffle or express term?

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In the course of pre-contractual negotiations, many statements will be made by both sides. If the contract is eventually put into writing, then, according to the parol evidence rule, oral statements will not be considered to be express terms of the contract. To reinforce this rule (which, like all legal rules, has a number of exceptions), drafters of commercial contracts always include a boiler-plate clause excluding any additional oral terms from the contract.

But not all contracts are put into writing. Many are based on a series of conversations between the parties and the question then arises: which parts of these conversations become express terms once the contract is made?

The contrasting cases of Bannerman v White and Routledge v McKay tell us that timing is relevant: for a statement to be incorporated into a contract as an express term, it must have been made shortly before the contract is formed.

Bannerman v White

[1861] 10 CBNS 844 (CCP)

Facts

Shortly before C entered a contract to buy D’s hops for beer, he checked that they were not treated with sulphur, which would render them useless for him.  D incorrectly said not, and C bought them.

C sued D for breach of a contractual term.  C won, as he had made it clear that he wanted sulphur-free hops shortly before the contract was made.

Rule

If a party makes it clear that a requirement is important at the time of contracting, this will be a term of the contract, rather than a mere representation.

Routledge v McKay

[1954] 1 All ER 855 (CA)

Facts

Several days before C entered a contract to buy D’s motor cycle, he asked its age.  D said that it was a 1942 model.  It was a 1930 model. C sued for breach of contract.  C lost as the age had not been discussed close to the making of the contract, so was not a contractual term.

Rule

In order to be a contractual term, a statement must have been made close to the formation of the contract.

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Causation: Cork v Kirby MacLean

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Causation can seem like a tricky subject, but it’s worth remembering that in the vast majority of cases of negligence, it is, in fact, straightforward.

Any C in a negligence action must prove that D caused their injury or damage, both factually and legally.

The starting point for any analysis of factual causation is the “but for” rule and Cork v Kirby MacLean is a good authority to use. Many cases will pass or fail the “but for” test and there may be no need to go further into the more complex cases based on increased risk of harm or comparative risk.

Facts

C was working on a narrow platform 23 feet above the floor of a factory. There were no guard rails. He had an epileptic fit and fell to his death. He knew he was epileptic, but his employers did not.

His employers were clearly in breach of their duty of care to him, as guard rails should have been fitted. However, they argued that they did not cause his death: they said that the epilepsy killed him.

Rule

If the damage would not have happened but for D’s breach of duty (the lack of guard rails), then D’s breach is the cause of that damage.

Conversely, if the damage would have occurred in any event, then the breach of duty cannot be said to be the cause of C’s damage.

Analysis

In this case, if the guard rails had been in place then C would probably have survived – he would still have had a fit, but would not have fallen to his death. Therefore, C (or rather his widow) proved that his employer’s breach was the factual cause of his death. There were no intervening events which could be regarded as having broken the chain of causation, so legal causation was also established.

Note that the epilepsy could equally be said to be the factual cause of C’s death. He probably would not have fallen, but for the epileptic fit. The fact that there is an additional cause does not excuse D.

[1952] 2 All ER 402 (CA)

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Get your FREE CaseLawCracker app today

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If you are revising for your Tort exams, you need CaseLawCracker Tort 1.

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It covers 50 cases in General Negligence, including all the essential topics:

  • Duty of Care
  • Psychiatric Harm
  • Economic Loss
  • Public Bodies
  • Omissions and Third Parties
  • Standard of Care and Breach
  • Causation
  • Remoteness

Revision tips – topic spotting

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Good luck if you are one of the many law students revising for exams. On this blog we have lots of study tips about learning case law, so if you are wondering how to pare down the number of cases you seem to be expected to learn, or don’t know where to start – have a browse in our “Hints and tips for legal study” section.

During this revision period, we’ll be posting regular revision and exam tips. Today, we’re looking at how to spot topics in Tort Law – although the guidance here will be relevant to other subjects as well.

Being able to spot topics is a fundamentally important skill. If you can do it quickly and accurately, and you have a clear idea about your own favourite topics, you will make your decision about which questions to tackle early in the exam, leaving yourself more time to answer them. Conversely, if you get it wrong and your answer is based on a misconception about the relevant area of law, you risk getting a mark of zero for that question.

By the way, this is not just an exam skill, it’s a vital skill for practising laywers.  Your clients will not come knocking at your door telling you that they have a problem with occupiers’ liability or the rule in Rylands v Fletcher – they will just pour out a story (which will be less coherent and probably less colourful than the average exam question). Your job is to find the correct legal framework to solve the problem.

A useful technique is to think about what issues are unique to or at least common within a particular Tort or topic, and look for the sort of facts that are required to raise those issues. For example, the special type of damage known as “Sensible Personal Discomfort” is unique to Nuisance (specifically private nuisance), so a Nuisance question will nearly always have a Claimant who is arguably suffering from SPD – so look out for smells, noise, fumes etc. A question on employers’ liability is likely to require an analysis of employment relationships, so will have facts relevant to the test in Ready-mix Concrete v Ministry of Pensions. You’ll be told about hours of work, who gives the orders, whether a uniform is required, etc.

A negligence question is easily identified by the presence of an accident causing personal injury. The harder part is deciding whether you are dealing with general negligence or one of the specialist areas. Don’t make the mistake of the students (there are always a few) who answer an occupiers’ liability question without any reference to the statutory regime imposed by the two Occupiers’ Liability Acts. Always run through the possibilities of one of the specialist types of negligence first – if none apply, then it’s general negligence.

Finally, two words of warning:

1                     Look out for “false friends”. For example, just because there is a doctor in a question, that doesn’t mean the question is about clinical negligence. Sometimes the doctor has a walk-on role in a story for another reason. Instead, look out for facts relevant the Bolam test, for example: “most doctors would have chosen a different technique”; “there are three different schools of medical opinion…”

2                     Questions can cover more than one area, so don’t jump to conclusions too quickly.

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CaseLawCracker apps now available!

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We’re delighted to report that  the first release of the CaseLawCracker revision apps are now available. All the key cases you need, with succinct summaries of the rules and facts, so you can memorise and test yourself on the details.

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The introductory price of the other apps is £1.49.

The full list of CaseLawCracker apps available so far is:

  • Tort 1 (iPad and Android)
  • Contract 1 (iPad and Android)
  • Tort 2 (Android)
  • Contract 2 (Android)
  • Tort 3 (Android)
  • Contract 3 (Android)

The iPad apps are available from the Vaze Learning website http://bit.ly/182i2DE

 

Promissory estoppel – the High Trees House case

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Like most equitable doctrines, promissory estoppel exists in order to mitigate injustice that might arise from the strict application of legal principles. As all law students know, a contract will not be enforceable without consideration. However, there can be situations where X has made a promise, unsupported by consideration, to Y, which Y relied upon. If X then goes back on his word, it would be unfair for him to gain a benefit from breaking his promise, so equity steps in. X could be declared “estopped” (which means prevented) from benefitting from going back on his word.

Central London Property Trust Ltd v High Trees House Ltd [1956] 1 All ER 256 (KBD)

Facts

C leased property to D in 1939.  During World War II, D lost rental income and C agreed to reduce the ground rent paid by D.

After the flats were fully let, C applied for back rent from when D regained his full income and for the full ground rent in the future.

C won, as the arrangement was only intended to cover the period that D’s income was reduced.  However, C could not have claimed back the money due during the period that D was losing income (obiter).

Rule

The elements promissory estoppel are:

1         The doctrine is a shield and not a sword

2         The promise must be clear and unequivocal

3          The promisee must have altered his position (although not to his detriment) in reliance on the promise

4           It must be inequitable to go back on the promise.

Nettleship v Weston

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Nettleship is an essential case on standard of care in the Law of Tort. It is also a useful case to learn because you get several rules for the effort of learning one case. Nettleship’s principal proposition is that learner-drivers are expected to attain the same standard as experienced drivers – even on their first outing behind the wheel. This principle chips away at the fundamental nature of fault liability in Tort because it sets up a standard which, for most novice drivers, is impossible to reach. How can it be their fault if they fail to achieve an impossible standard?

Of course, it cannot be their “fault” in any meaningful sense. Nettleship represents Tort Law at its most pragmatic and takes a broad-brush approach to justice. In practical terms, it’s not unfair to the Defendant-driver because he/she will not paying the damages: the insurers will be. And, given that the insurers will be sure to charge the novice drivers a hefty premium, it cannot be right that they wriggle out of paying damages on the grounds that it is not the driver’s fault if he/she hits the nearest lamp-post like poor Mrs Weston.

Nettleship v Weston [1971] 3 All ER 581 (CA)

Facts

D was having a driving lesson, instructed by C. She crashed into a lamp post and C suffered a broken knee cap. D’s insurers argued unsuccessfully that C had driven as well as could be expected for a novice driver and had therefore met the standard of care.

Rule

The standard of care expected of drivers is an objective standard and there is no discount for learners. All drivers, no matter what their level of experience, must meet the standard of the reasonably competent, qualified driver.

Note

You can also use Nettleship as authority for the Duty of Care owed by drivers to their passengers. It crops up again in Defences because the insurers also argued that C had consented to the risk of injury because he knew D was a learner-driver. That argument failed because C had specifically checked that D was insured, so he was clearly not agreeing to forego compensation in the event of an accident.

Alcock v Chief Constable of South Yorkshire

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15 April 1989 was a terrible day. The Hillsborough disaster led to the deaths of 96 people, nearly 800 injured at the ground and an unknown number of relatives of the dead and injured who suffered trauma and psychiatric harm. The impact of the appalling event was compounded by a police cover-up and the lies published in elements of the press, who blamed the Liverpool football supporters.

For Tort lawyers, the disaster has additional significance. It led to the landmark case of Alcock v CC of South Yorkshire which is now the central case setting out the test for recovery of damages in cases where so called “secondary victims” suffer psychiatric harm.

To understand how psychiatric harm is dealt with by the courts, it is essential to understand the distinction between primary and secondary victims. In some analyses, you also come across “actual victims”, so we have included them in the table below – but the two categories of actual and primary victims are treated in identical fashion, so they are often lumped together as “primary” victims.

 

Type of victim Definition Rule to determine duty of care
Actual victim Is at the disaster and suffers physical injury as well No distinction made between physical and psychiatric injury. To determine duty of care, use suitable precedent for that situation/relationship or test from Caparo v Dickman.
Primary victim Is at the disaster and, if not physically harmed, could have been. Suffers psychiatric harm as a result of own experience and fear for own safety
Secondary victim Not in danger personally. Psychiatric harm caused by fear for or witnessing harm caused to others. Special rules apply as set out in Alcock

 

Alcock v C.C. of South Yorkshire [1992] 1 AC 310

Facts

96 Liverpool football fans died in a crush at Hillsborough football stadium. Relatives of the dead sued for the trauma caused by the death of their loved one. D argued that he didn’t owe a DoC to relatives of the deceased.

Rule

A DoC will only be owed to secondary victims who suffer trauma as a result of an accident to someone else if they have:

1                     A recognised psychiatric condition

2                     Close ties of love and affection to a direct victim

3                     Direct perception of the traumatic event

4                     Proximity in time and place to the event

5                     C’s psychiatric harm is reasonably foreseeable.

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How much is enough?

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An agreement is not a legally binding contract unless there is consideration and it’s well established that consideration has to be “sufficient” but does not have to be “adequate”. The courts do not, on the whole, want to become involved in determining the price of goods and services. The essence of Contract Law is that the parties determine their own obligations, rather than have the courts do so for them. In the absence of additional circumstances, such as fraud or misrepresentation, we’re all free to enter into unprofitable agreements if we wish.

However, there must come a point where the consideration is worthless. Can it then be regarded as consideration at all? Two cases deal with this issue: Chappell v Nestle and White v Bluett.

Chappell v Nestle

D offered customers a record for a sum of money plus three of their chocolate wrappers, which D then discarded.  C, to protect royalties, sued to prevent the agreement.

It was held that the wrappers were part of the consideration, as they were included as part of the price for the record and thus boosted D’s sales.

White v Bluett

D was promised by his father X that D need not repay X money he owed if he did not dispute X’s will.

After X’s death, C, the executors, sued D for the money owed.  C won. D’s promise was not good consideration as he was not entitled to dispute the will in any event.

Adequate v sufficient

Chocolate wrappers were “sufficient” to be valid consideration despite being basically rubbish (confirmed by the fact that they were thrown out as soon as they were received) because they had a value to D as a mechanism for increasing turnover.

In contrast, D’s promise not to dispute a will was a valueless statement which did not benefit X (or his estate) so it was not sufficient to be good consideration.

Key points to remember when applying these principles

1              Adequacy is irrelevant – don’t concern yourself with a mismatch between the promises made by offeree and offeror.

2              If consideration appears to be worthless, check that it really is. Something apparently worthless may still indirectly benefit the recipient.

3              If consideration really is so worthless as to provide no benefit at all to the recipient, it is probably insufficient to count as consideration at all.

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