Advice Sandeep and Rachel in Relation to the Loss of Their Coats - Assignment Example

Contract Assignment – Level SCENARIO Sandeep and Rachel are two law They are really excited to be attending the Law Ball which is to beheld at the Pradisson Hotel, Leeds. When they arrive at the hotel Sandeep and Rachel want to leave their coats in the cloakroom. It costs 50 pence to leave the coats and in return they receive a ticket on which is printed a number identifying the coats, the price paid and the words “see over”. On the reverse side are printed the words: “The management maximum liability for any goods lost or damaged in our possession will be limited to £50.” At the end of a great evening they go to collect their coats and are told that their coats cannot be found. Sandeep complains and the manager points to the wording on the back of the ticket. Sandeeps coat was an expensive Christian Dior which had been a present for her birthday worth £ 350 and Rachel’s was from Pext and she had just bought it two days ago for £120. The manager only agreed to offer them £50 each. The girls told the manager that they thought the back of the ticket contained only advertising wording but the manager refused to increase his offer of compensation. The girls refuse the offer and leave the hotel disappointed. Rachel stays over with Sandeep that evening as she lives in the centre of Leeds and the following morning sets off home to Bolton. When she is nearly home Rachel’s car breaks down. She telephones her local garage who always service and repair her car, ABC Motors, who agree to send out Breakdown Repairs, a company they regularly use for breakdowns to repair the car. Breakdown repairs tell Rachel that the car cannot be repaired at the roadside but will have to be towed to the garage. Rachel agrees to this so Breakdown Repairs winches up Rachel’s car so that they can tow it to the garage and as they do so a worn out link snaps in the towing mechanism and this allows the car to fall. The car runs backwards over Rachel’s foot breaking several toes and the car’s suspension is damaged in the fall. On the back of the towing vehicle is displayed a notice: “ All towing takes place a the customers risk. ABC Motors, its servants, agents or independent contractors accept no responsiblity for any damage, injury or consequential loss, howsoever caused, as a result of any work carried out by or on behalf of the company.” Advise Sandeep and Rachel in relation to the loss of their coats. Further advise Rachel in relation to her injuries and damage to the car. In this particular situation it is necessary to consider the law regarding exclusion clauses. This will involve consideration of the rules laid down by the Unfair Contract Terms Act 1977 and the Unfair Terms in Consumer Contracts Regulations 1999. It will also be necessary to consider the liability of the breakdown company with regard to the injuries caused to Rachel. This will involve determining whether the operator of the truck was negligent, whether he owed a duty of care to Rachel and whether that duty was breached. From this it will be possible to determine the extent of the liability of the company. Considering first the law regarding exemption clauses it should be noted that in reaching their decision as to whether such a clause is valid the court will examine the bargaining power of both parties. The general assumption is that both parties have equal bargaining power when entering into a contract, however there are many occasions when this is not the case and the stronger party might abuse their dominant position. In determining whether there has been an abuse of power the courts will examine the terms included in the contract and decide whether these conditions can be regarded as fair. In reaching their decision the court can determine fairness through incorporation of the term into the contract or through legislation to determine whether the conditions offend against the principles of the Unfair Contract Terms Act 1977 or the Unfair Terms in Consumer Contracts Regulations 1999. In considering incorporation the court will look to see whether proper notice of the term has been given to the other party. Within a contract a term can be incorporated by actual notice, by signature, by provision of reasonable notice of by course of dealing. If specific notice of the term is given to the other party the court can deem that the exemption clause is valid. This was held to be the case in Coyle v The London, Midland and Scottish Railway Company [1930]1 where the court stated that as the plaintiff had been given actual notice of the exemption clause they were not entitled to claim against the respondent for the subsequent loss. By contrast in Lyons & Co v Caledonian Railway Co Inc [1909]2 the court found the respondents liable for the full cost of the lost luggage as they could not prove that the plaintiff had actual knowledge of the condition written on the back of the receipt. In Hood v Anchor Line (Henderson Brother) [1918]3 the court stated that the respondents could have avoided liability if they had obtained a signature off the plaintiff accepting the terms contained on the reverse of the ticket. This case involved an attempt by the respondents to limit their liability in relation to personal property carried on their vessel. The court stated in this case that the writing on the reverse did not amount to actual notice, but that if the respondent had obtained a signature from the plaintiff then the exemption clause would have been valid. In this case the court made the point that a person signing a contract would be bound by the terms therein regardless of whether they had actually read the contract before signing it or not. When considering the provision of reasonable notice the courts will consider whether the respondent has taken all reasonable steps to ensure that the other party is aware of the exclusion clause. In Richardson, Spence & Co and the Lord Gough Steamship CO Ltd v Minnie Rowntree [1894]4 the court stated that the exclusion clause could not succeed as reasonable steps had not been taken to draw attention to the clause which was written on the reverse of ticket. In some instances the court will look at the previous dealings between the plaintiff and the respondent. If it can be proven that the plaintiff has done business with the respondent on a number of occasions and that the standard terms have always been incorporated into the contract, the court are likely to infer that the plaintiff ought to have known about the exclusion clause. In the case of Curtis v Chemical Cleaning Company and Dyeing Co Ltd (1951)5 the assistant led the plaintiff to believe that there were no exclusion clauses on the document signed by the plaintiff. As a result of this the plaintiff did not bother to read the document. After the dress was ruined in the cleaning process the plaintiff attempted to claim from the respondent company who tried to aver that they were not liable due to the exclusion clause on the reverse of the receipt. The court stated that as the plaintiff was unaware of the clause it would not be regarded as incorporated into the contract. In the case of White v John Warrick and Co (1955)6 the court held that the exclusion clause was too vague in order for the court to hold that the clause was valid. In this case the plaintiff won has the clause simply said “we are not liable for any breach of contract”. The clause did not specifically mention the types of things that would amount to a breach of contract. In this case the negligence of the respondent meant that the cycle bought by the plaintiff was faulty and as there was no direct exclusion for negligence the court awarded in favour of the plaintiff. Similarly in the case of Hollier v Rambler Motors (1972)7 the court held that the exclusion clause did not specify the type of damage that was to be excluded from the contract and awarded in favour of the plaintiff. The Unfair Contract Terms Act 1977 is primarily applied in business liability, although in cases where the harm is caused directly to the plaintiff rather than the property of the plaintiff the UCTA can be applicable. The courts have held the respondents liable in cases where the plaintiff has suffered personal injury or death as a result of the actions of the respondent regardless of any exclusion clause. In Adler v Dickson & another [1955]8, a case prior to the UCTA, the court held that a contract for services could not exclude liability for personal injuries despite their attempt to do so within an exclusion clause. This policy seems to have been adopted into the UCTA 1977 s2, and therefore it is likely that very few, if any, respondents would be able to avoid liability through the insertion of an exclusion clause. In the case of Woodman v Photo Trade Processing [1981]9 the court found the respondent liable for the lost photographs since it had been the negligence of the respondent that had caused the loss. In this case the respondents had hoped to rely on a clause in the contract limiting liability to the cost of a replacement film. The court stated that under the Supply of Goods and Services Act 1982 s13 the respondent had been negligent and the plaintiff was entitled to compensation for this. Applying all of the above to the problem question it is likely that Sandeep and Rachel could be awarded the full cost of replacing their coats, especially if they can show that they were not made aware of the clause on the reverse of the ticket when they left the coats at the club. Relying on some of the similar cases listed above it is likely that the court would award in their favour, especially since it is likely that they would not have had the opportunity to read the reverse of the ticket. If they had previously used the particular venue before the court might have decided that the respondent was not liable as it might be inferred that they ought to have known of the exclusion clause from past experience. In relation to the damage caused to the vehicle by the breakdown truck Rachel would have to hope that the court would deem that the notice on the rear of the truck was insufficient to be regarded as an incorporated exclusion clause. Rachel could argue that the equipment they were using was defective which led to her car being damaged and that the company were negligent in the performance of their duties. If she can prove that it was as a direct result of their negligence the court might decide that the exclusion clause does not cover the negligence of the operator of the truck and award in her favour. In relation to Rachel’s injury, she is likely to succeed if she relies on s2 of the UCTA 1977, since liability for personal injury cannot be exempted under this section. The courts are likely to hold the company responsible for her injury as the accident has been caused as a direct result of the actions of the driver of the breakdown truck. This would entitle Rachel to compensation for her injury. Under the law of tort Rachel would be entitled to bring a claim even if she was not entitled to claim under the 1977 Act. Bibliography Beale, HD, Bishop, WD, Furmston, MP, Contract Cases and Materials, 3rd Ed, 1995, Butterworths Bixby M.B., Beck-Dudley C., Cihon P.J. The Legal Environment of Business, (2002). Civil Procedure Volume 1 2002, Sweet & Maxwell Civil Procedure Volume 2, The White Book Service, 2002, Sweet and Maxwell Dignam, Alan J., “Company Law”, 4th ed. / Alan Dignam, John Lowry, Oxford Oxford University Press, 2006 Goode, R M, “Commercial law ”, 3rd Edition, London, Penguin 2004. Harvey, b & Marston , J . Cases & Commentary on Tort, 1998, 3rd Ed, Pitman Publishing Keenan, D and Riches, S, Business Law, 7th Ed, 2005, Longman Mozeley & Whiteley’s, Law Dictionary, 1993, 11th Ed, Butterworths Rose, FD, Statutes on Contract, Tort & Restitution, 10th Ed, 2000, Blackstone’s Treitel, G H. Law of Contract, 1999, 10th Ed, Sweet & Maxwell Adler v Dickson & another [1955] 1 QB 158 Coyle v The London, Midland and Scottish Railway Company [1930] SLT 349 Curtis v Chemical Cleaning and Dyeing Co Ltd [1951] 1 KB 805 Hollier v. Ramblers Motors (AMC) Ltd [1972] 2 QB 71 Hood v Anchor Line (Henderson Brother) [1918] AC 837 Lyons & Co v Caledonian Railway Co Inc [1909] SC 1185 Richardson, Spence & Co and the Lord Gough Steamship CO Ltd v Minnie Rowntree [1894] AC 837 White v. John Warrick & Co Ltd [1953] 1 WLR 1285 Woodman v. Photo Trade Processing ( 1981) 131 NLJ. 933 Read More