Contract Law

•    Cases where the consumer was convinced to sign a contract which was induced by an oral statement inconsistent with the written contract.
•    Cases where the prod. was defective, and the consumer wants to sue based on the defect.
o    but has promised in a clause of the contract that they won’t complain of any defect in the product, or even that there was no defect in the contract.
o    In our legal system, people are “free to be foolish”
o    for the courts to simple “fix” this situation would be to do away with freedom of contract (that contracts are the will of the parties – not the state), then contract-law would not, in effect, exist anymore.
•    The will of the parties is the only difference between contract law and tort law.
•    The characteristic of all these cases is that in the written contract there will be a problematic clause
•    depending on what the limit is in a limitation of liabilty clause, it can practically be an exclusionary clause (for all practical intents and purposes).
o    Sometimes there are hints in the jurisprudence that courts should not come down as hard on limitation of liability clauses as they do on exclusionary clauses, however.
•    A consumer contract is a contract between a business and a consumer.
•    courts are more solicitous to the consumer than to businesses in a commercial contract – businesses are assumed to be on equal footing and ought to be able to take care of themselves.
•    the question is often whether the words of the clause are broad enough to shield the business from liability
•    If the judge cannot interpret a way to the desired solution, more drastic action may be taken…
•    some of the more intersting cases involve whether judges have another technique beyond interpretation
•    hint of this in Denning’s Thornton v. Shoe Lane Parking
•    resp. for a line of juris. which said that if the judge cannot interpret a way around a clause, can bring down the rule of law that says that judges can interpret a contract without out reference to the problematic clause.
•    “The clause will be void for unreasonableness”
•    Again, if this maintained, contracts could be thrown out the window.
•    [Handout – Clauses Excluding Liability]
o    in the omitted part, says, basically, but there there came along the super-clause.  The perfect limitation of liability clause (because had been so perfected by redrafting)
o    Thence came the rule of ‘fundamental breach’ in 1956.  If the big concern was guilty of a breach whih went to the very root of the contract, then it could not rely on the printed clause to exempt itself from liability.
o    says that to some it was a mistake, because it was elevated into a rule of law.
o    this is because once it becomes a rule of law, it must be put into the architecture of contract law – there is no place in contract law for such a principle, as it negates freedom of contract…
o    says it was a mistake for them to elevate it as such – says should have used it as a method of interpretation – the “true construction of the contract”

Photo Production Lrd. v. Securicor Transport Ltd.
•    Is the case that brings to an end in England the history and career of the doctrine of fundamental breach
•    in Mitchell [our handout], Denning is trying to resurect the doctrine.  It failed.
•    It is a commercial contract case, so the court has less pity here – easier for them to get rid of the doctrine.
•    say that as long as the company wasn’t negligent in hiring the guard, then even if the employee did set the building on fire, the co. would not be liable.
•    Judge here said that Denning’s attempt to resurect the doctrine of fundamental breach is a non-starter.
•    ¶16 – says that Harbutt’s Plasticine must be overruled.
•    ¶13 – says Parl. has taken a hand and passed the Unfair Contract Terms Act 1977 –parl refrained from legislating over the whole field of contract.  Court says that Parl. intentionally left commercial parties free to take their risks.
•    this made it easier for the judges to abolish the doctrine – the most troubling cases had been taken care of by legislation.
•    ¶19-20 – the provision in the contract which at first glace appears onerous, in fact is sensible.  The security company was receiving only 26p per visit in exchange for its freedom from liability.
o    placing the risk on the client company.
o    The security company has no knowledge of the value or fire-precautions, for example, of the plant.
o    context is imp here.
o    Rule in Canada Steamships:  If wishing to exempt oneself from liability, the words of the clause have an extremely high threshold of clarity.
•    This case says there is not and never was  doctrine of fundamental breach – cannot declare a clause void for unreasonableness.
o    all contract clauses are to be interpreted according to their true construction.
o    if the words are drafted broadly enough to cover an incident, then they simply do.

Tilden Rent-a-Car Co. v. Clendenning
•    Clendenning rented a car from Tilden, signed the agreement and purchased insurance.
•    Had an accident, and had had a drink or two (apparently not enough to cause a ‘loss of control’)
•    Pled guilty in criminal court to impaired driving (on the advice of his lawyer)
•    “customer shall be fully liable for all collision damage if vehicle is used, operated or driven in violation of any of the provisions of this rental agreement…”
o    the provisions are on the back ¶3 “in particularly small type and so faint… as to be hardly legible…”
o    “by any person who ahs drunk or consumed any intoxicating liquor, whatever be the quantity…”
•    can Clendenning get out of liability by being foolish?
•    ¶7 – stated that he hd known the full terms of the contract, he would not have agreed to it.  Bell does not believe him.
•    The other options avail. to him, car-rental wise, would have had the exact same provision.
•    Clendenning is, far from the ideal consumer, the typical consumer.
o    he is ‘everyman’ – he can read, but fails to.
•    The business party promises something, and tries to get away from delivering it.

For next day, Hunter Engineering, down to

Exception Clauses p. 838
•    Warranty, in its technical meaning, is a sub-contract
•    It has a technical meaning
o    Close reading; strict construction
•    Wallis v. Pratt – “warranty” did not apply to exclude the implied statutory “condition” of the Sale of Goods Act that products must correspond to their description.
o    ¶5 - exclusion of “any warranty of condition” does not avail a seller if there has been a ‘negligent misstatement’
o    ¶6 – in the absesnce of an explicit mention of negligence, a judge is likely to find that exemption cluases do not exclude liability for negligence.
•    Judges believe that it should be very difficult to exclude oneself from the possibility of negligence, and that it must at the very least be explicit.
•    “The rule in Canada Steamships” – adopted this extreme example of reading down.  If an exemption clause could be given a meaning but the meaning was not broad enough to extend to negligence, then it does not extend to negligence.
•    If the exemption clause could refer to something other than negligence, then it is deemed to refer to that thing.
•    P. 839 – Inconsistency.
o    A number of ways that judges tackel ‘internal inconsistency’
•    To say that the provision that the parties agreed on explicitly takes precedence over some provision that is simply there as part of a form-document.
o    The passage on 839 is accurate, but misleadingly simplistic.

Parker v. Southeast Railway
•    A case that refers to the imp. of railway
•    Bottom Page 849 – caput lupinum – “Having the head of the wolf”.  Anyone might legally ‘kill’ them.
•    Railway companies were often the targets of juries, as insurance companies are today.
•    Railway takes the pos. that the passenger signed away their rights.
o    There was a notice on the wall of the cloak-room
o    There were conditions written on the ticket
•    Page 847 – “see back”; several clauses relating to articles left by passengers – “The company will not be resonsible for any package exceeding the value of £10.”
•    Bag could not be found.  Claimed that his bag was worth £24 10s.
•    Mellish L.J. – “In and ordinary case, where an action is brought on a written agreement which is signed by the defendant, the agreement is proved by proving his signature, and, in the absesnce of fraud, it si wholly immaterial that he has not read the agreement and does not know its content …in the case [where the agreement has been reduced to writing so that the writing is the sole evidence of the agreement without signing it]there must be evidence of the agreement itself to prove that the defendant assented to it.”
•    P said that he knew there was writing on the ticket, but not what the writing was.  Said thought it may have been a receipt ¶3.
o    No question that had he read the writing, he would have been bound.
•    Contract law presumes that people, if given something to read, will read it.
•    Bramwell L.J.
o    For this judge, the question is whether the person who does not read the conditions in a better condition than he who does.
•    Bottom 848 – Mellish’s famous repropositions:
o    ¶3 – 3 propositions.  I am of the opionion there fore that the proper direction to leave to the jury in these cases is:
•    1)  That if the person receiving the ticket did not see or know that there was writing on the ticket, he is not bound by the conditions;
•    2)  that if he knew there was writing, and knew or believed that the writing contained conditions, then he is bound by the conditions;
•    [should this be subject to the condition that the writing be relevant and ‘usual’ to the circumstances?; that anything out of the ordinary would be brought specifically to the attention of the purchaser?]
•    3)  that if he knew there was writing on the ticket, but did not know or believe that the writing contained conditions, nevertheless he would be bound, if the delivering of the ticket to him in such a manner that he could see there was writing upon it, was, in the opinion of the jury, reasonable notice that the writing contained conditions.
•    [Would the purchaser be bound to every single condition on the ticket, or just the not-unusual contractual provisions?  Could they insert provisions to do with seizing first-born children and have done with it?]
•    page 849 – Bramwell L.J.
o    Bramwell is skeptical
o    Proposes that putting it into his hand should be no different than saying “read that” by the porter.  Asks what more the railway company could have done
o    Page 850 – qualifies what he says – says that the market has the answer.  If railway companies (or anyone else) began putting unreasonably terms in their contracts, then the public would hear of it and begin using alternative [forms of transportation, for example].
o    “What if there was ome unreasonable condition… Would the depositor be bound?  I might content myself by asking:  Would be be, if here were told ‘our conditions are on this ticket,’ and he did not read them.  In my judgment, he would not be bound in either case.  I think there is an implied understanding that there is no condition unreasonable to the  knowledge of the party tendering the document and not insisting on its being read – no condition not relevant to the atter in hand.”
•    Important qualification regarding ‘unreasonable conditions’

Note 5 page 851
•    J. Spurling Ltd. v. Bradshaw
o    Post-war case involving 8 casks of orange juice.
o    Most of the OJ disappeared while being stored in a bailee warehouse.
o    Decision of Denning L.
•    “I agree that the more unreasonable a clause is, the greater the notice which must be given of it.  Some clauses which I have seen would need t be printed in red ink on the face of the docuent with a read hand pointing to it before the notice could be held to be sufficient.”
•    “Next it was said that the landing account and invoice were issued after goods had been received and could not therefre be part of the cotract of bailment:  but the defendant admitted that he had receive many landing accounts before.  True, he had not troubled to read them.  True, he had not troubled to read them.  On receiving this account, he took no objection to it, left the goods there, and went on paying the warehouse rent for months afterwards.  It seems to be that by the course of business and conduct of the parties, these conditions were part of the contrat.  In these circumstances, the plaintiffs were entitled to rely on this exempting condition…”

read p 851-852

Thornton v. Shoe Lane Parking Ltd. – page 857
•    sign at entrance:  “All cars parked at ownder’s risk”.
•    Then drive up a ramp and press a button for a ticket.
•    Denning L. finds that the ramp is the offer, and driving up the ramp and pressing the button is the acceptance.
•    Even if the ticker were part of the conditions, how could one be bound by conditions that one could not see until after ‘acceptance’?
•    Same as the conditions posted inside the garage.
•    ¶2 – offer accepted when the P drove up the entrance and had the ticket thrust at him by the weight-sensor.  The contract was the concluded, and could not be altered by any words printed on the ticket.
•    ¶3 - Then gives analogy whereby the ticket machine is a booking clerk ‘in disguise’
o    goes back to 3 questions pose by Mellish L.J. in Parker
o    ¶4 – counsel for the ds admitted that the Ds did not do what was reasonably sufficient to give the P notice of the exempting condition.
o    “I do not pause to enquire whether the exempting condition is void for unreasonableness.”
•    BE CAREFUL.  There is no jurisprudence that allows courts to say that an exempting clause was void for unreasonableness.  Denning L.J. was likely trying to begin this jurisprudence, but it didn’t take.
•    Denning determines that the P was not bound by the exempting condition as there was no evi. that he knew of it.

Page 860 – Signed Contracts
•    “When a documet containing contractual terms is signed, then, in the absense of fraud, or I will add, misrepresentation, the party signing is bound, as it is wholly immaterial whether he has read the codument or not.”
o    Ie:  You signed, you’re bound.
•    Courts often want to save people from their own folly.
o    This causes tension.

For next day:  Tilden, Photo Production.