MAHARASHTRA NATIONAL LAW UNIVERSITY

LAW OF CONTRACT

FIRST DRAFT

Hollier v. Rambler Motors AMC Ltd (1972)

Submitted to : Prof. Anand Raut

Submitted by: Saurabh Misal

Enrolment no:-2017046
Ratio:-
The plaintiff left his car with the defendant garage for repair. Whilst there it was substantially
damaged by fire. The defendant sought to rely upon their terms which would negative liability,
saying that the terms had been incorporated by implication through the course of dealings between
the parties.
Held: The appeal succeeded.
Stamp LJ said: “the course of dealings between the parties was not such that the terms of earlier
contracts can properly be imported into the oral contract here in question.”
Latey LJ said: “the main stream of the law, the basic principle, as I understand it, is that if A enters
into a contract with B. and wants to include in it a term exempting himself from liability for his own
negligence, to be effective that term must sufficiently clearly convey that it is liability for
negligence which is being excluded. It has been argued during this appeal that where A cannot be
liable otherwise than in negligence, no such sufficiently clear words are required. In my opinion,
that is not the law. In each case one has to look, at the words which are claimed to exempt. When in
fact A can be liable in negligence only, the law, I believe, is that the fact to employ Lord Justice
Scrutton’s words in Rutter v. Palmer, ‘will more readily operate to exempt him.’ But the law goes no
further than that.”

Case Summaries:-
I. Alderslade v. Hendon Laundry Ltd.
Ten large handkerchiefs were lost by the laundry. It argued that its liability was limited by a clause
in the contract which read: ‘The maximum amount allowed for lost or damaged articles is twenty
times the charge made for laundering.’ That was 11s 5d, about one tenth of the cost of the
handkerchiefs at £5.
The judge held that the claim succeeded, and Hendon Laundry Ltd appealed.
The Court of Appeal of England and Wales held the limitation clause did apply, because although
negligence was not mentioned, the defendants could only have been liable for the handkerchiefs if
they had been negligent. A common carrier, for example, must make clear that negligence is
excluded, and if that is not done in clear terms, only liability for a strict duty will be excluded. But
here, the only other duty was the absolute, primary obligation to perform the contract itself.

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II. Hardwick Game Farm v. Suffolk Agricultural Poultry Producers Association
Hardwick Game Farm (HGF) purchased compounded meals from Suffolk Agricultural Poultry
Producers Association (SAPPA) to feed their pheasants. Many of the birds died because the feed
contained toxins. SAPPA had purchased the supplies from two wholesalers under oral contracts.
Their normal course of dealing was evidenced by sales notes containing a clause stating the buyer
bore responsibility for latent defects. The wholesalers had purchased the supplies from two parties
on their standard terms, which purported to exclude liability for latent defects. HGF recovered
damages from SAPPA. SAPPA sought indemnity from their suppliers, who in turn sought indemnity
from theirs.
SAPPA recovered damages. Where goods are supplied for a particular purpose, the statutory
obligations apply and cannot be excluded in the contract. Membership of the same trade association
was insufficient to rebut the presumption that buyers may rely on the skill of sellers in warranting
goods are of merchantable quality. Although pheasants were not poultry for the purposes of the
1926 Act, the warranty still applied and damages were recoverable for harm suffered to pheasants.

III. McCutcheon v. David MacBrayne Ltd.

McCutheon delivered his car to the defendant shipping company for carriage from the Hebrides to
the mainland. The car was destroyed when the ship sank because of the company’s negligence. The
company’s usual practice was to issue a risk note to customers exempting them from liability for
losses resulting from their negligence. McCutheon had signed such notes on previous occasions but
had never read the terms. On this occasion, no such risk note was supplied, and McCutheon sought
to recover the value of his car.
McCutheon was successful in his claim. The clause had not been successfully incorporated into the
contract. McCutheon could not be bound by a clause on the basis of a previous course of dealing
when he did not have knowledge of the specific term. Previous dealings are only capable of
importing a term into a later contract where actual or constructive knowledge of the terms is
established, and the parties assent to them.

IV. Olley v. Marlborough Court Ltd.

Olley was a guest in the defendant hotel. On arrival, Olley paid for a week’s board in advance and
then went to the room. In the room, a notice was displayed stating the proprietors would not be

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responsible for any items lost or stolen, unless handed to them for safe keeping. Olley left the room
and deposited her key on the board in reception before leaving the hotel. The key was taken and
several items were stolen from her room. Olley sought damages in negligence.
Olley was successful in her claim and recovered the cost of the stolen items in their entirety. The
exclusion clause had not been successfully incorporated into the contract because the contract was
concluded at reception, and the notice purporting to exclude liability was not visible until after the
contract was formed, when the guest entered the bedroom.

V. Canada Steamship Lines Ltd. v. The King

Canada Steamship Lines entered into a Crown lease in 1940. The Duration of the lease was for 12
years and the lease pertained to dock property on St Gabriel Basin on the Lachine Canal. All of this
was situated in the Port of Montreal. Pursuant to the Crown lease, Canada Steamship Lines became
the tenant there. The property included a freight shed. The lease contained an exclusion clause
which related to that shed, specifically stating that the Claimant would not have any claim for
damage to goods which were stored in the shed. Nevertheless, under the lease the Defendant had the
duty of maintaining the shed including bearing the costs of so doing. In the process of maintaining
the shed, an employee used an oxy-acetylene torch (which was improper and negligent practice)
and accidently set some cotton bales on fire, with that fire spreading and eventually burning down
the entire shed. This caused significant damage, including $40,714 worth of damage to the
Claimant. The Claimant wished to sue the Defendant, but the Defendant asserted that no liability
existed due to the exclusion clause.
It was held that the exclusion clause, as well as a different indemnity clause, were both ambiguous.
In that situation, they would be interpreted in favour of the Claimant. In fact, the issue of negligence
may be irrelevant, as strict liability could apply due to the Defendant’s failure to keep the shed in
good repair.

VI. Thornton v. Shoe Lane Parking Ltd.

Thornton drove his car to a car park. Outside the car park, the prices were displayed and a notice
stated cars were parked at their owner’s risk. An automatic ticket machine provided a ticket, a
barrier was raised and Thornton parked his car. In small print on the ticket it was stated to be issued
subject to conditions displayed on the premises. On a pillar opposite the machine was a notice

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stating the owners would not be liable for any injuries occurring on their premises. Thornton had an
accident and sought damages from Shoe Lane Parking (SLP).
The exclusion clause had not been successfully incorporated into the contract. SLP had not done
enough to bring the existence of the terms to Thornton’s attention prior to the contract formation.
The offer was contained within the notice at the entrance, and Thornton accepted the offer on those
terms when he drove in. It was too late to seek to incorporate further terms after he had driven in to
the car park.