Contract between Kati and the Valet Parking Lot - Assignment Example

Contract Terms Institution Date INTRODUCTION Exclusion clauses are sometimes used by contractual parties to limit or exclude one party’s liability in regard to performance of the contract. However, courts are reluctant to recognize exclusion clauses that are unfair to one party in the contract. For exclusion clauses to be recognized they must be (a) incorporated into the contract, and (b) and the liability must be related to the subject of the exclusion clause. Issue Does the exclusion clause in the contract between Kati and the Valet parking lot exclude damage arising from flooding due to collapse of the valet’s parking roof? Is Kati bound by the terms and conditions printed at the back of the receipt? Law According to Chapleton v Barry UDC [1940] 1 KB 532, an exclusion clause has to be incorporated into the contract for it to be effective1. In addition, Davis v Pearce Parking Station Pty Ltd (1954) 91 CLR 642 asserts that the wording of an exclusion clause must be specify kind of liability they seek to exclude2. This means that exclusion clauses that seek to exclude liability generally are ineffective. Discussion Incorporation of an exclusion clause is one of the most important considerations in deciding whether they are effective within a contract. In Chapleton v Barry UDC [1940] 1 KB 532, an exemption clause printed at the back of a ticket was ruled not to have been properly incorporated in the contract3. A clause is effectively incorporated, if it signed against, by course of dealing or by notice4. It falls upon the person wishing to rely on the clause to show the clause forms part of the contract. In this case, the Valet parking is seeking to rely on incorporation by notice. As regard the damage, the Valet parking can argue that it displayed a prominent sign excluding liability for loss or theft of the motor vehicle. Courts treat the matter of notice very seriously when deciding the effectiveness of an exclusion clause in an unsigned document. The law requires that parties give notice to each other of any clauses that affect the performance of the contract. According to Adams, notice of the existence of the exclusion clause must be given prior to the formation of the contract5. A contractual party can give notice of the existence of exclusion clauses through actual or constructive notice. In actual notice, the party relyingon the clause actually calls the attention of the other party to the exemption clause or reads out the clause. On the other hand, constructive notice requires the other party to do anything in their power to bring the attention of the second party to the exemption clause. In this case, the Valet Car Park had printed a prominent sign that sought to inform drivers about the conditions of their parking. However, the Valet’s efforts to bring the exclusion clause to the attention of client’s driving were not enough. Kati drove past the sign as their was no boom gate, gate or some obstruction to slow her down as she drove past the sign. The Valet who brought her the ticket for parking did not also seek to bring her attention to the terms of parking printed at the back or the notice for the exclusion clause she had just driven past. Generally, courts are willing to recognize exclusion clauses more easily if they are contained in a contractual document. Where contractual clauses are contained in other document such as receipts of payment, tickets and notices, sufficient and reasonable notice is needed to make them effective. Parker v SE Railway Co (1877) 2 CPD 416 argues that exemption clauses must be contained in contractual documents where users would normally expect to find them. Courts will normally rule contractual terms written at the back of non-contractual documents ineffective. Denning LJ, obiter, in J Spurling v Bradshaw [1956] 1 WLR 461 at page 466 asserted that anexclusion clauses should be prominently displayed at the front of the contractual documents to call the attention of contractual parties to their existence6. This prominence is one of the factors considered in deciding the validity of an exclusion clause. In the case, the Valet car park printed terms pertaining to penalty charges to clients who leave their car at the parking overnight. The terms are harsh as a client is charged $10,000 for leaving his car at the facility for just one night. However, the car park does not make any reasonable and sufficient steps to bring Kati’s attention to the existence of the harsh terms7. The Valet’s effort to bring the attention of Kati to the existence of those terms is late. As seen in Olley v Marlborough Court [1949] 1 KB 532, the party relying on the exclusion clause is required to bring the attention of the other party to the existence of the exclusion clause before or at the time of entering the contract8. Olley v Marlborough Court Ltd [1949] 1 KB 532, the plaintiffs paid for a room in advance. However, their belongings were stolen from their hotel room due to the hotel’s negligence9. The hotel sought to rely on a notice at the back of the door of the couple’s room. The court ruled that the couple became aware of the notice after they had already entered into a contact with the hotel and thus the exclusion clause was ruled to be ineffective. Courts require even higher standards for incorporation if contractual terms are unnecessarily harsh to one contractual party. As seen in J Spurling Ltd v Bradshaw [1956] EWCA Civ 3, more notice is needed for incorporation of harsh terms in the contract10The penalties for Cars left overnight at the Valet Parking Service are very harsh and thus the car park was under obligation to make clients aware of these terms. The Valet Parking Service car park cannot expect Kati to pay the penalties for leaving his car overnight when she had not been made aware of the harsh penalties for leaving her car at the Valet parking Service overnight. In this case, it can be concluded that the exclusion clause pertaining to damage of the Car within the valet car park was not properly incorporated in the contract. Kati was not given reasonable and sufficient notice of the existences of both the exclusion clause and the terms setting down penalties for leaving cars overnight at the Valet Parking Service. Furthermore, courts may still rule the exclusion clause invalid if analyze the construction of the exclusion clause. Courts accept exclusion clauses to be valid if they are not ambiguous about the kind of liability they sought to limit or exclude. Exclusion clauses must not be general denials of liability, they must be specific to the kind of liability they seek to limit. Thornton v Shoe Lane Parking Ltd [1971] 2 QB 163, an exclusion clause was ruled to be invalid because it was too general as regard the type of liability it sought to limit. The plaintiff had parked his car in a carpark that bore the sign “All cars parked at owners risk”11. Pillars inside the carpark read: “Carpark accepts no liability”. The plaintiff was injured as he returned to his car. The carpark sought to escape liability by relying on the exclusion clause. However, the court ruled that the exclusion clause was invalid as it was too general on the type of liability is sought to limit. Similarly, in Davis v Pearce Parking Station Pty Ltd (1954) 91 CLR 642, a clause worded “Car parked at owner’s risk”and further “No responsibility for loss or damage of any description” was ruled to be invalid12. The court argued that the clause was too general to cover liability for negligence that was the subject of the case. The Valet Parking Service cannot rely on the exclusion clause as the clause does not mention damage for cars within the parking lot. The exclusion clause the parking service is seeking to rely upon is related to loss and theft of the car within the Valet parking lot. The exclusion clause states that the Valet Parking Service does not accept liability as a consequence of lgoss or theft of the client's property. Thus, the clause will be ruled ineffective as seen in Thompson v LMS Railway [1930] 1 KB 41 which asserts that exclusion must specify the type of liability they seek to exclude from the contract13. Conclusion Kati is within her rights to compel Valet Parking Services to repair her car. The damage to Kati's car occurred after the roof of the parking lot collapsed and her car was subsequently flooded. This means the damage is due to the negligence of the car park. However, the exclusion clause seeking to exclude the car park from liability is not properly incorporated into the contract and its wording does not cover liability for negligence. Secondly, the valet failed to give reasonable and sufficient notice regarding the penalty terms for leaving cars overnight at the carpark. Bibliography A. Articles/Books/Reports Adams, Alix, Law for business students. (Pearson/Longman, 3rd edition, 2003) B. Cases J Spurling v Bradshaw [1956] 1 WLR 461 Thompson v LMS Railway [1930] 1 KB 41. Olley v Marlborough Court [1949] 1 KB 532, at 542 Spurling Ltd v Bradshaw [1956] EWCA Civ 3, at 466 Thornton v Shoe Lane Parking Ltd [1971] 2 QB 163, at 169 Davis v Pearce Parking Station Pty Ltd (1954) 91 CLR 642, at 649 Thompson v LMS Railway [1930] 1 KB 4, at 53 Chapleton v Barry UDC [1940] 1 KB 532, at 532 Davis v Pearce Parking Station Pty Ltd ( 1954)91 CLR 642, at 649. Chapleton v Barry UDC [1940] 1 KB 532, at 521 Read More