A Case Summary of Couchman v Hill [1947]

Case name & citation: Couchman v Hill [1947] KB 554; [1947] 1 All ER 103

Court of Appeal, England and Wales
The bench of judges: Scott, Tucker and Bucknill L.JJ.
Area of law: Exclusion clauses; terms in a contract; conditions and warranties

In Couchman v Hill [1947] KB 554, the Court of Appeal addressed the issue of whether an oral statement made prior to a contract can be incorporated as a term of the contract despite written terms suggesting otherwise.

Facts (Couchman v Hill)

The defendant auctioned a heifer, described as “unserved” (i.e., not yet used for breeding) in the catalogue. The sale conditions included a clause that lots were sold “with all faults, imperfections and errors of description,” and that auctioneers were not liable for mistakes.

Before finalizing the purchase, the buyer asked both the auctioneer and seller to confirm that the heifer was unserved, and they both assured him that it was.

However, the heifer was later found to be pregnant and died from complications related to giving birth at too young an age.

Judgment taken

The Court of Appeal held that the oral assurances provided by the auctioneer and seller were deemed to be a term of the contract. The Court recognized that the representation about the heifer being unserved was crucial to the buyer’s decision to purchase.

Reasoning

Importance of Statement: The Court considered the significance of the oral statement to the buyer. The greater the reliance placed on a statement by one party, the more likely it is that such a statement will be treated as a term of the contract.

In other words, if a statement is crucial to one party’s decision to enter into the contract, it is more likely to be considered a term of the contract. In Couchman v Hill, the Court found that the oral assurance about the heifer being unserved was integral to the buyer’s decision to enter the contract. As a result, it was incorporated into the contract as a term. This was despite the written contract terms stating that the sale was “with all faults.”

Misrepresentation vs. Term: If a statement is so crucial that the party would not have entered the contract without it, the statement may be treated as a term rather than merely a misrepresentation.

Key Takeaway (Couchman v Hill)

A statement made during the pre-contractual negotiations can be deemed a term of the contract if it was so significant that the party would not have entered into the contract if he had known it to be untrue. This case illustrates that oral assurances can be considered terms of the contract if they are crucial to the party’s decision to contract.

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A Case Summary of Schawel v Reade [1913] 2 IR 81

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L’Estrange v Graucob [1934]: Facts and Decision

L’Estrange v Graucob [1934] is a famous contract law case that is known for laying down the rule that the contents of a signed contract are binding on the signatory. This is irrespective of whether the party signing has read them or not.

Given below are the case details:

Case name & citation:	L’Estrange v F Graucob Ltd [1934] 2 KB 394
The concerned court:	Court of Appeal
Year of the case:	1934
The bench of judges:	Maugham LJ and Scrutton LJ
Area of law:	Terms of a contract; exclusion clause

Facts of the case (L’Estrange v F Graucob Ltd)

The plaintiff, L’Estrange, signed a contract for the acquisition of a cigarette vending machine without reading it. It contained a clause specifying that “any express or implied condition, statement, or warranty, statutory or otherwise not stated herein is hereby excluded.”

The machine turned out to be defective when it was delivered. The plaintiff filed a lawsuit and argued that there existed an implied term as to fitness for purpose under the applicable Sale of Goods Act. The machine did not meet the standards of merchantable quality and was not fit for purpose.

The defendant attempted to rely on the clause in the signed contract that, in effect, barred this implied term from being enforced. It was claimed that it was an ‘entire agreement’ clause and that it excluded all implied conditions.

Issue that arose

Since the plaintiff had not read the contract and was unaware of this clause, was she still bound by it?

Judgment of the Court in L’Estrange v F Graucob Ltd

The decision was taken in favor of the defendant.

The court determined that the plaintiff was obligated by all of the terms of the contract, despite the fact that she had not read the document and was unaware that it contained an exclusion clause.

According to the court, the plaintiff could not prove any fraud or misrepresentation regarding her signing the contract without reading it.

As a general rule, where an exclusion clause is included in a signed document, the signatory is obligated by it unless there was fraud or misrepresentation. The fact that the signatory might not have actually read the contents is unimportant.

The reasoning behind the decision

A person is obligated by the terms of a contract they sign. This is regardless of whether or not the person has read the document or is fully aware of its contents. Contrary to unsigned contracts, signed contracts do not need the opposite party to provide sufficient notice of the document’s contents. Where a document is signed, it will be assumed that the signatory is aware of its contents.

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A Summary of Curtis v Chemical Cleaning and Dyeing Co [1951]

Curtis v Chemical Cleaning and Dyeing Co [1951] is a famous contract law case that dealt with the issue of misrepresenting a term. It determined whether or not a party signing a document will be bound if he or she has been misled as to the meaning of the words contained therein.

Given below are the case details:

Case name & citation:	Curtis v Chemical Cleaning and Dyeing Co [1951] 1 KB 805
Court and jurisdiction:	The Court of Appeal; England and Wales
Year of the case:	1951
The bench of judges:	Somervell, Singleton and Denning, L.JJ.
Area of law:	Exclusion clause in a contract; misrepresentation

Facts of the case (Curtis v Chemical Cleaning and Dyeing Co)

Curtis (the plaintiff) entrusted her wedding dress to Chemical Cleaning (the defendant) for cleaning, and they handed her a receipt to sign. The staff member clarified that the document would release the defendant from any responsibility for potential harm to the dress’s sequins and beads. Trusting the explanation, Curtis signed the receipt. However, upon receiving the dress back, she discovered unsightly stains on it. Dissatisfied, she initiated legal action against Chemical Cleaning. The defendant attempted to use the exclusion clause, which essentially absolved them from liability for “any damage, however arising.” In other words, the exclusion clause in reality was far wider than just to cover damages of sequins and beads.

Issue raised

Was the exemption clause valid? Could it prevent the liability of Chemical Cleaning?

Judgment of the Court in Curtis v Chemical Cleaning and Dyeing Co

The defendant relied on the exclusion clause. Nonetheless, the court ruled in favor of the plaintiff, reasoning that the defendant’s reliance on the clause was unfounded since they had misrepresented its true implications to Curtis.

It was held that the misrepresentation (although innocent) by the staff member regarding the scope of the clause overrode the fact that the plaintiff had signed the document.

The general rule when an exclusion clause is contained in a signed document

Exclusion clauses in a contract hold great significance. If the non-benefiting party has signed a document containing an exclusion clause, it generally means they are obligated by the terms of that clause, unless there was fraud or misrepresentation involved. Whether or not the signatory actually read the document becomes irrelevant. The key point is that once the document is signed, the signatory becomes bound by its contents, emphasizing the importance of being aware and understanding the implications before putting pen to paper.

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Darlington Futures Ltd v Delco Australia Pty Ltd (1986)

Darlington Futures Ltd v Delco Australia Pty Ltd (1986) is an Australian case in which the High Court of Australia confirmed that professional persons might restrict their liability by incorporating a specific clause in a contract to that effect. Given below are the case details:

Case name & citation:	Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500
The concerned Court:	High Court of Australia
Decided on:	16 December 1986
The bench of judges:	Mason, Wilson, Brennan, Deane and Dawson JJ
Area of law:	Exclusion of liability; contra proferentem rule

Facts of the case

Darlington’s case involved a contract between a futures broker (Darlington Futures) and a corporation (Delco Australia) looking to engage in futures trading for tax purposes. The contract had some questions as to whether the company would like to have their account traded at the broker’s discretion and the answer was NO. The broker, in violation of the contract, failed to close out certain transactions, resulting in significant losses for the respondent. It engaged in risky transactions without the client’s authority. The respondent took action to recover those losses and the broker invoked the following exclusion clauses:

Clause 6 –

“The Client … acknowledges that the Agent will not be responsible for any loss arising in any way out of any trading activity undertaken on behalf of the Client whether pursuant to this Agreement or not …”

Clause 7 –

“Any liability on the Agent’s part … for any claim arising out of or in connection with the relationship established by this agreement … shall not exceed $100.”

Issue that arose

Whether the exclusion and limitation clauses were valid? And how the clauses should be construed in cases of ambiguity?

Judgment of the Court in Darlington Futures Ltd v Delco Australia Pty Ltd

The court stated that the language of both sorts of clauses must be construed in light of the overall contract. Furthermore, where possible, the natural meaning of the clause should be applied, although, in circumstances of ambiguity, the court may construe the clause contra proferentem (i.e., against the interests of the party that made the clause and now seeks to rely on it).

The High Court held that under the terms of clause 6, the appellant could only be protected when any trading activity was carried out with authority. Therefore, this exclusion clause was not valid since it could only exclude liability where trading was done on behalf of the client. But because the trading activity was done without authority, hence, this exclusion clause was not valid.

In addition, the Court decided that Clause 7’s reference to any claims “in connection with” the relationship established by the agreement was broad enough to permit the appellant to limit its damages notwithstanding the fact that the trading activity was not authorized. This clause could apply since it did not limit in its language to trading done on behalf of the client. Thus, the broker was successful in limiting its liability to $100.

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Causer v Browne [1952]: A Quick Summary

Case name & citation: Causer v Browne [1952] VLR 1

Decided on: 12 October 1951

The learned judge: Herring C.J.

Area of law: Exclusion of liability and its notice

What is the case about?

Causer v Browne [1952] is an Australian case concerning the effectiveness of an exclusion clause.

According to it, even if a statement excluding liability is placed on the back (or front) of a ticket that is given to a person at the time of hiring an item, a court may find that a reasonable person would expect the ticket to be merely a voucher providing evidence of payment rather than a contractual document.

Facts of the case (Causer v Browne)

In order to have her dress dry-cleaned, the plaintiff’s husband (Causer) left it with the defendant (Browne). The dress was stained by the defendant, who later attempted to absolve themselves of responsibility by relying on an exclusion clause that was printed on a docket and given to the plaintiff’s husband at the time of receipt. It said that there would be no responsibility of the dry cleaner for any loss or damage to the garment.

Issues that arose

Was the defendant liable for breach of contract and negligence?

Could the liability be avoided on grounds of the exclusion clause contained in the docket?

Judgment of the Court in Causer v Browne

The Court decided that the exclusion clause was not valid because a reasonable person would have thought that the docket was an aid to identify the dress for collection rather than a contractual document. And also, the fact that the docket contained any such exclusion terms was not brought to the attention of the customer.

Hence, the defendant (dry cleaner) was liable.

Relevance of the exclusion clause and its notice

The non-benefiting party must have been made aware of the existence of the exclusion clause in order for it to be considered a part of the contract. To put it another way, it is the duty of the party that will benefit from the clause to demonstrate that the other party was aware of both its existence and its terms.

Moreover, having an exclusion clause written into a document like a ticket, receipt, or notice, etc. may pose a number of issues. Would it be reasonable for a person to assume that the non-contractual document included such an exclusion of liability, or that it would even form part of a contract at all?

In the given case of Causer v Browne, the exclusion clause in the docket did not constitute a term of the contract.

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Sydney City Council v West (1965): A Summary

Case name & citation: Sydney City Council v West (1965) 114 CLR 481

The concerned Court: High Court of Australia

Decided on: 16 December 1965

Area of law: Exclusion of liability; four corners rule

What is the case about?

Sydney City Council v West (1965) is an Australian contract law case on the issue of exclusion clauses.

Facts of the case

West takes his car to the parking lot of the Sydney City Council and parks it there. He was issued a ticket that instructed him to present this ticket in order to regain possession of the vehicle. In addition, an exclusion clause on the ticket protected the parking lot from liability for any loss, regardless of how the loss/damage/injury may occur or be caused. West returned to pick up his car, but it had been stolen; a thief had broken into the car and driven it down to the checkout area. The operator had let the thief go on his being claiming that he had lost the parking ticket. Thus, the plaintiff brought an action against the Sydney City Council to claim damages. But the Council denied liability on the grounds of the exclusion clause on the ticket.

Issue

Could the liability of the Council be excluded in these circumstances?

Judgment of the Court in Sydney City Council v West

The Court held that the exclusion clause could not be applied in this case and the Council could not rely on it when the plaintiff’s car was stolen from the car park.

It was held that a clause that excludes liability can only do so if the act from which it is seeking to exclude liability falls within the parameters of the contract.

The clause gave protection (for acts of negligence) only in the performance of the contract: it could not have been intended to protect the Council from “negligence on the part of the Council’s servants in doing something which it is neither authorized nor permitted to do by the terms of the contract”.

The release of the vehicle was not merely negligent; it was also a delivery outside the terms of the contract. The act of the attendant at the exit area to allow the thief to take the car without checking was not something that was authorized. And enforcing the exclusion clause might seem to have produced injustice.

Therefore, as a result of the fact that the circumstances fell outside of the scope of what the clause was supposed to cover, it was determined that the clause did not apply.

The main principle from the case of Sydney City Council v West

Four corners rule

The act for which you are attempting to exclude your liability must be authorized or contemplated by the contract within the four corners of the contract in order for you to be able to do so.

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