Hollier v Rambler Motors (A M C) Ltd

A contractual term may be incorporated through a previous course of dealing only where the dealings were sufficiently regular and consistent to justify the reasonable conclusion that the parties contracted on that basis. Three or four transactions over five years did not meet that standard.

A clause excludes liability for negligence only where its language clearly conveys that effect. The fact that negligence is the only possible basis of liability makes that construction more readily available, but does not compel it. Where words can reasonably operate merely as a warning about loss occurring without negligence, that construction is preferred unless sufficiently clear words exclude liability for the contracting party’s own fault.

The plaintiff delivered his car to the defendants’ garage under an oral agreement for repairs. A fire caused by the defendants’ negligence substantially damaged the car. The defendants relied on words printed on forms used during several earlier transactions: they were not responsible for fire damage to customers’ cars on the premises.

The Brentford County Court held on 15 June 1971 that the printed words were incorporated through a course of dealing and, following Turner v Civil Supply Association Ltd [1926] 1 QB 50, excluded liability for negligence. The plaintiff appealed. The questions were whether the words formed part of the oral contract and, if so, whether they excluded liability for a negligently caused fire.

1. Appeal allowed unanimously. Salmon and Stamp LJJ and Latey J held that the defendants’ printed words were not incorporated into the oral repair contract. Three or four repair transactions during five years were too infrequent to establish the regular and consistent course of dealing needed to import a term from earlier contracts. The regular monthly transactions considered in the Hardwick Game Farm case [1969] AC 31 were materially different. McCutcheon v David MacBrayne Ltd [1964] 1 WLR 125 supported the conclusion that the defendants could not rely on the earlier dealings.

2. The words would not in any event have excluded negligence. Salmon LJ held that an exclusion of liability for negligence must be conveyed in language sufficiently plain to bear that meaning for an ordinarily literate and sensible person. Express use of the word “negligence” is unnecessary, but the clause must clearly communicate that liability for the contracting party’s own fault is excluded.

3. Rutter v Palmer [1922] 2 KB 87 established that, where negligence is the only possible source of liability, an exemption clause will more readily operate to exclude it. That consideration assists construction but does not make exclusion automatic. Salmon LJ explained Alderslade v Hendon Laundry Ltd [1945] KB 189 consistently with that principle: rules of construction remain guides, and the court must determine the meaning of the particular words.

4. Stamp LJ held that words capable either of operating as a warning about fire or of excluding negligence should be construed as a warning unless special words or circumstances justify the latter meaning. Latey J likewise held that the fact that a bailee could be liable only in negligence did not dispense with the need for sufficiently clear language. The present words reasonably warned customers that the garage was not responsible for fires occurring without its negligence. They did not clearly exclude liability for a fire caused by its own negligence.

5. Turner v Civil Supply Association Ltd [1926] 1 QB 50 and Fagan v Green & Edwards Ltd [1926] 1 KB 102 were held to have been wrongly decided and were not reliable authorities. Judgment was entered on the basis that the exclusion failed. Damages were to be assessed or agreed. The plaintiff received the costs of the appeal and the proceedings below; leave to appeal was refused.

1. Court of Appeal: The plaintiff’s appeal was allowed unanimously. The purported exclusion was neither incorporated through the earlier dealings nor effective to exclude liability for negligence. Damages were to be assessed or agreed.

2. Brentford County Court: On 15 June 1971, Judge Sir Shirley Worthington-Evans QC found that the defendants had negligently caused the damage but held that the printed term was incorporated and excluded liability. The Court of Appeal reversed that decision.