Law Assignment
Content
Introduction Bob wishes to sue Torp Dry cleaners for losing and damaging his cloths and shirts under the law of contract because he believes that the dry cleaners have breached the contract and exclusion clause mentioned, does not relieve them from the liability of losing and damaging his cloths. However, Torp dry cleaners will argue that they did not breach the contract under the exclusion clause of contract law. In order to advice Bob, it is necessary to see whether the exclusion clause had been incorporated in the contract. Secondly, we need to see whether the exclusion clause in this item covers the loss or damage in question. These two steps will ensure the validity of the situation in question. If the exclusion clause is still found to be valid, the clause will be checked against the Trade Practice Act (1974) to finally ensure that the claim is not void. Lastly, we need to find out whether the incident could have produced different results if the sign was brought into the notice of Bob.
Incorporation of the Exclusion Clause
The first particular issue that arises in this case is whether the exclusion clause was incorporated in the terms. Bob can easily argue that he did not notice the clause whereas Torp will definitely argue that the clause is on the back of the tickets and a sign board containing the clause is also placed on the desk. However, incorporation of exclusion clause largely depends whether the agreement was signed or unsigned. If an agreement is signed, it is extremely difficult for the plaintiff to proof that the exclusion clause was void 1. Hence, there would not have been any ways for Bob to claim any compensation from the dry cleaners if he signed a contract with Torp dry cleaners. Since, he did not sign the ticket at the time of the contract, Bob can still argue that he was not aware of the exclusion clause at the time of the contract. However, since it is an unsigned document, the court must decide whether any normal person will expect to find contractual terms in that document and whether the defendant put enough effort to bring the document to the notice of the plaintiff. Bob might argue that the ticket he received for the jacket and shirt was certainly not a contract. He might say it was just a voucher that he thought he would have to produce during the collection of his cloths and hence, the exclusion clause mentioned in the ticket was ineffective. This incident is quite similar to cases like Causer vs Brown and Chapelton vs Barry Urban District where the plaintiffs were given a ticket for the service they bought2,3. In Both cases, the court decided that the defendant cannot exclude its liability based on the exclusion clause stated on a document that most people would not expect to have contractual terms. For this case, there is a
1 2 3
L‟Estrange v F Graucob Ltd. [1934] 2 KB 394, 400. 7. [1894] AC 217, 219 Causer v Brown [1952] VLR 1 Chapelton v Barry Urban District Council [1940] 1 KB 532
good chance that the court might give the results in favor of Bob based on the placement of the exclusion clause on the back of the ticket. Bob might further argue that Torp dry cleaners did not do enough to bring the exclusion clause to his notice. In the favor of Bob, the biggest argument would be that the ticket does not contain anything such as „look back for conditions‟, which would make him to turn the ticket and read the conditions. The exclusion clause might be effective if the message is written on top of the ticket. However, from the case study at hand, it cannot be stated clearly whether any message was written on the top of the ticket or not. Since there is nothing mentioned regarding the message on the top, it can be assumed that nothing of that sort was written on top of the ticket. Hence, Bob can argue that the Torp‟s effort cannot be considered reasonable enough to bring it to customers‟ attention4.
In the case, we see that Bob certainly did not see the exclusion clause and he should get a favorable result from the court. According to the Olley and Marlbrough case, defendants must bring the exclusion clause in the reasonable notice of the plaintiff to ensure that the exclusion clause is effective5. Torp will try to prove that they tried to bring it to reasonable notice of the customers by placing it also on the counter so that customers can see it at the time when they get into a contract with Torp dry cleaners. However, the sign board should be placed and the fonts used (brighter that sticks out) there should be as such that the customers will see it during the purchase of the service and only then, defendants can avoid the liabilities by using exclusion clause6. Therefore, Torp needs to prove that the fonts used in the sign board and placement of it were in such manner that customers can easily read it when they are at the counter. If Torp can prove it, then the court will assume that Bob should have been aware of the exclusion clause when or at the time he made the contract. From the case in hand, it is not very clear about the readability of the signboard. It is stated that the sign was small and in black and white even though it was placed on the desk of the counter. Therefore, it can be assumed that the sign was not clear enough for Bob to notice, as it did not use any striking color that made it evident.
However, Torp can still avoid the liability under the exclusion clause if they prove that Bob should have been aware of the clause due to his previous dealings with them 7 . Bob‟s argument can still be that he did not see the exclusion clause even in the previous dealings and hence, it is impossible for him to infer that such an exclusion clause exists8. However, Henry Kendall Ltd v William Lillico Ltd rejected the McCutcheon v David MacBrayne Ltd case by stating that significant visit of the purchaser should be a good indication for
4 5
Parker v South Eastern Railway Company (1877) 2 cpd 416 Olley v Marlborough Court Hotel [1949] 1 KB 532 6 Thrornton v Shoe Lane Parking ltd 1971 2 qb 163 7 J Spurling Ltd v Bradshaw [1956] 1 WLR 461 8 McCutcheon v David MacBrayne Ltd. [1964] 1 WLR 125, [1964] 1 All ER 430
the seller to assume that he had already agreed to the term9. Since Bob had been to that shop 10 times in last three weeks, Torp might argue that he should have noticed it. Even though, this particular incident is not beyond doubt that Bob must have seen the exclusion clause due to his previous dealings with Torp, there is a good chance court might assume that 10 visits in 3 weeks should be sufficient enough for Bob to be knowledgeable about the exclusion term. The court might hold Bob responsible not to be able to gain knowledge about the exclusion clause from his significant number visits to the Torp in the last few weeks and failure to see the exclusion clause, will not allow Bob to state that he was not aware of it. In such instances, court implies that the plaintiff should have had the knowledge of the exclusion clauses because they are dealing with the defendant on a regular basis. Therefore, it can be stated that the exclusion clause was a part of the contract through prior course of dealing
Interpretation of the Clause
Bob can prevail the compensation for the loss and damage if he can prove that the wordings in the clause were ambiguous 10 . Firstly, the exclusion clause will be given a very natural and ordinary meaning in the light of the whole contract. However, any presence of ambiguity in the exclusion clause will ensure that the decision goes against the party that is trying to benefit from the exclusion clause11. For this instance, the wording is very clear on the back of the ticket, sign on the desk and these clearly say Torp will not take any responsibility of the damage or the loss of cloths regardless of how that had been happened. The inclusion of words „how that damage or loss may be caused‟ in the exclusion clause made it very wide to cover an y loss or damage caused by Torp due to their negligence12. In the case, it is stated that the strain or damage on the shirt was caused by the negligence of the employees. However, the inclusion of „how that damage or loss may be caused‟ in the exclusion clause also covered the damages or loss es that would take place due to negligence of Torp. Hence, it seems quite unlikely for Bob to receive a compensation for the damage of the shirt.
Since the exclusion clause was very wide, it will be quite difficult for Bob to receive compensation for the loss of jacket. In order for Bob to be eligible to receive the compensation, he would have to prove that Torp‟s negligence in the loss of the jacket was outside of the given authority of Torp13,14. The main responsibility of Torp out of the contract was to wash the jacket and give it back to its real owner once he shows the ticket. Bob‟s jacket was taken by some other customers who claimed to lose his ticket, which was a result of
9
Henry Kendall Ltd v William Lillico [1969] 2 AC 31 Contra Pherenum rule 11 White and John Warwick & Co Ltd [1953] 1 WLR 1285 12 Glenmont Investments Pty Ltd v O'Loughlin [2001] FCA 925 13 Thomas National Transport (Melbourne) Pty Ltd v May and Baker (Australia) Pty Ltd (1966) 115 CLR 353 14 Four Corners
10
negligence from the employees of Torp. Even though, the exclusion clause was wide enough to cover negligence of the employees, it does not cover the negligence of employees in the areas, which are neither permitted nor authorized by the contract15,16. Hence, the incident of mistakenly giving away Bob‟s jacket to someone else is not protected by the exclusion clause and Bob, therefore, can expect to get a compensation for the lost Jacket from the Torp dry cleaners. However, Torp could have avoided the liability of the loss of the jacket through exclusion law only if the jacket was lost within the shop. The moment they gave the jacket to the wrong person who did not have any ticket, they went beyond the authority of the contract and hence, the exclusion clause in the contract for jacket became ineffective.
Testing against Trade Practice Act (1974) The exclusion clause seems to be valid for the shirt, however; Bob can still claim damage for both if he could prove that the exclusion clause is void under the section 68, 68 A and 74 (A) of Trade Practice Act (1974). All these sections were taken care off by Torp since they clearly mentioned, “ Torp dry cleaners take exceptional care of your clothing”
Conclusion The exclusion clause was incorporated in the contract through constructive notice and Torp wrote the exclusion clause in such a way that it was wide enough to cover any loss caused by the negligent behavior (within their authority) of the employees of Torp dry cleaners. However, the exclusion clause did not cover their liabilities that arise from the negligence of the employees outside their authority stated in the contract. The clause was not also void under section 68, 68(A) and 74 of Trade Practice Act. Therefore, Bob can avail compensation for the loss of the jacket but he cannot expect to receive any compensation for the shirt.
Part b) Here, Bob has already seen the message and he asked the authority about the implication of the exclusion term. In response to his query, Torp stated that they are not liable for any loss or damage caused by the flood and fire. The terms are very clear here. Hence, there is no problem with the exclusion of the clause. The clause does not contain any ambiguity and hence, it can be given natural and ordinary meaning in the light of the whole contract. Since, Torp clearly mentioned that it excludes any kind of damage due to flood and fire; there is no way this exclusion clause will exclude their liability to damage or lose his jacket and shirt.
15 16
City of Sydney vs West (1965) 114 CLR 481 AT 487, 495, 503 TNT (Melbourne) Pty Ltd v May and Baker (Australia) Pty Ltd (1966) 40 ALJR 189
Incorporation of the Exclusion Clause
The first particular issue that arises in this case is whether the exclusion clause was incorporated in the terms. Bob can easily argue that he did not notice the clause whereas Torp will definitely argue that the clause is on the back of the tickets and a sign board containing the clause is also placed on the desk. However, incorporation of exclusion clause largely depends whether the agreement was signed or unsigned. If an agreement is signed, it is extremely difficult for the plaintiff to proof that the exclusion clause was void 1. Hence, there would not have been any ways for Bob to claim any compensation from the dry cleaners if he signed a contract with Torp dry cleaners. Since, he did not sign the ticket at the time of the contract, Bob can still argue that he was not aware of the exclusion clause at the time of the contract. However, since it is an unsigned document, the court must decide whether any normal person will expect to find contractual terms in that document and whether the defendant put enough effort to bring the document to the notice of the plaintiff. Bob might argue that the ticket he received for the jacket and shirt was certainly not a contract. He might say it was just a voucher that he thought he would have to produce during the collection of his cloths and hence, the exclusion clause mentioned in the ticket was ineffective. This incident is quite similar to cases like Causer vs Brown and Chapelton vs Barry Urban District where the plaintiffs were given a ticket for the service they bought2,3. In Both cases, the court decided that the defendant cannot exclude its liability based on the exclusion clause stated on a document that most people would not expect to have contractual terms. For this case, there is a
1 2 3
L‟Estrange v F Graucob Ltd. [1934] 2 KB 394, 400. 7. [1894] AC 217, 219 Causer v Brown [1952] VLR 1 Chapelton v Barry Urban District Council [1940] 1 KB 532
good chance that the court might give the results in favor of Bob based on the placement of the exclusion clause on the back of the ticket. Bob might further argue that Torp dry cleaners did not do enough to bring the exclusion clause to his notice. In the favor of Bob, the biggest argument would be that the ticket does not contain anything such as „look back for conditions‟, which would make him to turn the ticket and read the conditions. The exclusion clause might be effective if the message is written on top of the ticket. However, from the case study at hand, it cannot be stated clearly whether any message was written on the top of the ticket or not. Since there is nothing mentioned regarding the message on the top, it can be assumed that nothing of that sort was written on top of the ticket. Hence, Bob can argue that the Torp‟s effort cannot be considered reasonable enough to bring it to customers‟ attention4.
In the case, we see that Bob certainly did not see the exclusion clause and he should get a favorable result from the court. According to the Olley and Marlbrough case, defendants must bring the exclusion clause in the reasonable notice of the plaintiff to ensure that the exclusion clause is effective5. Torp will try to prove that they tried to bring it to reasonable notice of the customers by placing it also on the counter so that customers can see it at the time when they get into a contract with Torp dry cleaners. However, the sign board should be placed and the fonts used (brighter that sticks out) there should be as such that the customers will see it during the purchase of the service and only then, defendants can avoid the liabilities by using exclusion clause6. Therefore, Torp needs to prove that the fonts used in the sign board and placement of it were in such manner that customers can easily read it when they are at the counter. If Torp can prove it, then the court will assume that Bob should have been aware of the exclusion clause when or at the time he made the contract. From the case in hand, it is not very clear about the readability of the signboard. It is stated that the sign was small and in black and white even though it was placed on the desk of the counter. Therefore, it can be assumed that the sign was not clear enough for Bob to notice, as it did not use any striking color that made it evident.
However, Torp can still avoid the liability under the exclusion clause if they prove that Bob should have been aware of the clause due to his previous dealings with them 7 . Bob‟s argument can still be that he did not see the exclusion clause even in the previous dealings and hence, it is impossible for him to infer that such an exclusion clause exists8. However, Henry Kendall Ltd v William Lillico Ltd rejected the McCutcheon v David MacBrayne Ltd case by stating that significant visit of the purchaser should be a good indication for
4 5
Parker v South Eastern Railway Company (1877) 2 cpd 416 Olley v Marlborough Court Hotel [1949] 1 KB 532 6 Thrornton v Shoe Lane Parking ltd 1971 2 qb 163 7 J Spurling Ltd v Bradshaw [1956] 1 WLR 461 8 McCutcheon v David MacBrayne Ltd. [1964] 1 WLR 125, [1964] 1 All ER 430
the seller to assume that he had already agreed to the term9. Since Bob had been to that shop 10 times in last three weeks, Torp might argue that he should have noticed it. Even though, this particular incident is not beyond doubt that Bob must have seen the exclusion clause due to his previous dealings with Torp, there is a good chance court might assume that 10 visits in 3 weeks should be sufficient enough for Bob to be knowledgeable about the exclusion term. The court might hold Bob responsible not to be able to gain knowledge about the exclusion clause from his significant number visits to the Torp in the last few weeks and failure to see the exclusion clause, will not allow Bob to state that he was not aware of it. In such instances, court implies that the plaintiff should have had the knowledge of the exclusion clauses because they are dealing with the defendant on a regular basis. Therefore, it can be stated that the exclusion clause was a part of the contract through prior course of dealing
Interpretation of the Clause
Bob can prevail the compensation for the loss and damage if he can prove that the wordings in the clause were ambiguous 10 . Firstly, the exclusion clause will be given a very natural and ordinary meaning in the light of the whole contract. However, any presence of ambiguity in the exclusion clause will ensure that the decision goes against the party that is trying to benefit from the exclusion clause11. For this instance, the wording is very clear on the back of the ticket, sign on the desk and these clearly say Torp will not take any responsibility of the damage or the loss of cloths regardless of how that had been happened. The inclusion of words „how that damage or loss may be caused‟ in the exclusion clause made it very wide to cover an y loss or damage caused by Torp due to their negligence12. In the case, it is stated that the strain or damage on the shirt was caused by the negligence of the employees. However, the inclusion of „how that damage or loss may be caused‟ in the exclusion clause also covered the damages or loss es that would take place due to negligence of Torp. Hence, it seems quite unlikely for Bob to receive a compensation for the damage of the shirt.
Since the exclusion clause was very wide, it will be quite difficult for Bob to receive compensation for the loss of jacket. In order for Bob to be eligible to receive the compensation, he would have to prove that Torp‟s negligence in the loss of the jacket was outside of the given authority of Torp13,14. The main responsibility of Torp out of the contract was to wash the jacket and give it back to its real owner once he shows the ticket. Bob‟s jacket was taken by some other customers who claimed to lose his ticket, which was a result of
9
Henry Kendall Ltd v William Lillico [1969] 2 AC 31 Contra Pherenum rule 11 White and John Warwick & Co Ltd [1953] 1 WLR 1285 12 Glenmont Investments Pty Ltd v O'Loughlin [2001] FCA 925 13 Thomas National Transport (Melbourne) Pty Ltd v May and Baker (Australia) Pty Ltd (1966) 115 CLR 353 14 Four Corners
10
negligence from the employees of Torp. Even though, the exclusion clause was wide enough to cover negligence of the employees, it does not cover the negligence of employees in the areas, which are neither permitted nor authorized by the contract15,16. Hence, the incident of mistakenly giving away Bob‟s jacket to someone else is not protected by the exclusion clause and Bob, therefore, can expect to get a compensation for the lost Jacket from the Torp dry cleaners. However, Torp could have avoided the liability of the loss of the jacket through exclusion law only if the jacket was lost within the shop. The moment they gave the jacket to the wrong person who did not have any ticket, they went beyond the authority of the contract and hence, the exclusion clause in the contract for jacket became ineffective.
Testing against Trade Practice Act (1974) The exclusion clause seems to be valid for the shirt, however; Bob can still claim damage for both if he could prove that the exclusion clause is void under the section 68, 68 A and 74 (A) of Trade Practice Act (1974). All these sections were taken care off by Torp since they clearly mentioned, “ Torp dry cleaners take exceptional care of your clothing”
Conclusion The exclusion clause was incorporated in the contract through constructive notice and Torp wrote the exclusion clause in such a way that it was wide enough to cover any loss caused by the negligent behavior (within their authority) of the employees of Torp dry cleaners. However, the exclusion clause did not cover their liabilities that arise from the negligence of the employees outside their authority stated in the contract. The clause was not also void under section 68, 68(A) and 74 of Trade Practice Act. Therefore, Bob can avail compensation for the loss of the jacket but he cannot expect to receive any compensation for the shirt.
Part b) Here, Bob has already seen the message and he asked the authority about the implication of the exclusion term. In response to his query, Torp stated that they are not liable for any loss or damage caused by the flood and fire. The terms are very clear here. Hence, there is no problem with the exclusion of the clause. The clause does not contain any ambiguity and hence, it can be given natural and ordinary meaning in the light of the whole contract. Since, Torp clearly mentioned that it excludes any kind of damage due to flood and fire; there is no way this exclusion clause will exclude their liability to damage or lose his jacket and shirt.
15 16
City of Sydney vs West (1965) 114 CLR 481 AT 487, 495, 503 TNT (Melbourne) Pty Ltd v May and Baker (Australia) Pty Ltd (1966) 40 ALJR 189
