Stay On Legal Proceedings Paper

Contract Law Assignment

Advise Paddy of any possible legal action that he may take, supporting your answer with discussion and analysis of the relevant law in your answer, and consider how these apply to the issues arising.

This claim is about how an exemption clause can be incorporated into this contract. As Brian Doolan puts it:

'An exemption clause is a contractual stipulation which totally excludes, or partly diminishes, the liability of one party either in contract or tort. A party wishing to rely on such a clause must show that it was incorporated into the contract, and it covered the loss or damage suffered' (Doolan, 1999, p. 97).

Although it can be seen that Irish Rail appear to have an exemption clause that excludes their liability let's prove if it's been correctly incorporated into the contract in this incident.

A number of basic rules have been formulated by the courts in order to determine whether an exclusion clause has been incorporated correctly into the contract. The reason for this is because of the fact that very often these terms are not brought to the attention of contracting parties and are often included in the small print, on the backs of tickets or in terms and conditions found elsewhere.

In earlier cases such as in the Irish case of Johnson v Great Southern & W.RY plaintiffs regularly got caught with the terms of an exclusion clause within a contract when it was found that the terms and conditions could be found elsewhere. In a similar English case the courts decided that

'where a party is provided with a document which refers to terms obtainable elsewhere, the party is bound if it can be proven that he read the terms or that everything reasonable was done by the party relying on the term to bring the clause to his attention.' (Mc Guley BL, p. 107)

In order to prove that these terms had or had not been read the courts came up with a test called the reasonable test. This test was seen in the case Parker v SE Railway . Here we saw as series of questions which a court should ask:

1. Did the party know of the conditions? If so he is bound

2. Was notice given? If not the other party is not bound

3. If notice was given but the other party did not know the notice contained writing he will not necessarily be bound

4. If he did know there was writing on the document then the court must ask whether reasonable notice of the conditions has been given. If the other party knows the ticket contained not merely writing but conditions he will be bound even if he is unaware of the precise terms.

(Clark, 2004)

Nowadays courts still loosely base they're proceedings in relation to exemption clauses on these rules but in recent times have increasingly moved away from it opting for a more approachable manner. This is, when dealing with exemption clauses, proving the validity of incorporation into a contract:

1. By Signature

2. By Notice, or

3. By course of dealings.

What we hope to prove here is that Paddy's contract with Irish Rail did not in fact have an exclusion clause incorporated.

Incorporation by Signature

The rule of law states that whether read or not, a person who signs a contractual document is bound by the terms. This can be shown in the case of Knox v Great Northern Railway . Even though the plaintiff had signed the contract after the damage to the horse was done, it was held that the horse was connected to the carriage as to form one transaction. It did not matter that the contract was signed after the injury. Another example of how a signature on a contract binds the person whether he/she has read the terms of the contract is in the case of O' Connor v First National Building Society . Here an applicant for a loan signed a loan application which had a clause contained within which said 'No responsibility can be accepted by the society for the condition of the property'. After the purchase of the house, the defendants found that the house was not in a good condition. Here Lynch J. held that the defendant (building society) was not liable in respect to the poor conditions of the premises which they had inspected prior to the plaintiffs purchase of the house.

In relation to Paddy's case we can see that in no way has there been a signature in any form through his course of dealings with Irish Rail. We can therefore rule out the possible incorporation of an exclusion clause through signature.

Incorporation by Notice

According to Doolan (1999), should the exemption clause be printed on a document which is exchanged, or posted up in the place where the contract is made it will only be incorporated into a contract if reasonable notice of its existence is given to the party. Whether reasonable notice is given depends on three factors.

The first of which is the Nature of the document which has the clause printed on it. If a document is not meant to have contractual force but merely is a receipt to prove payment of service e.g. Cinema Ticket, then the exemption clause is not incorporated into the contract. But where the document is meant to have contractual force e.g. receipt to retrieve goods, then the exemption clause is incorporated when the receipt is exchanged. One could argue whether the document is intended to be a contractual document or not in each circumstance. In the case Miley v McKechnie Ltd , it was argued whether the receipt that the plaintiff received for their garment was in fact a contractual agreement or not. It was held in favour of the defendant as on the receipt it read 'All orders accepted without guarantee' with directed attention to the conditions which were printed on the back. A main factor of this case was that the plaintiff used these services regularly and received many receipts like this one. So the plaintiff should've been familiar with the conditions that were contained on each receipt. In a similar case, Curtis v Chemical Cleaning Co. , it was found in favour of the plaintiff as the defendant was found to have misrepresented the scope of the exemption clause to the plaintiff on the receipt docket.

The second factor is the Degree of Notice. It's not a question of whether the party needs to prove that the notice was actually