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George is illiterate. He recently booked with a coach company for a “cheap day excursion” to the Lake District. A notice in the booking office states:
“all tickets are issued subject to the rules and regulations of the company – copy on request”.
The coach stopped at a cafe and George’s expensive camera was stolen from the coach. (The driver had negligently left the coach door unlocked). The coach company are refusing to compensate George, as they are relying on a company rule which states: “the company will accept no liability for items lost or stolen on a cheap day excursion.”
The coach company has attempted to exclude liability by relying on an exclusion clause in its regulations. In order to have a chance of success the company must first be able to show that this clause was a term of the contract. In order to be a term the company must have taken reasonable steps to bring it to George’s attention : Parker v South Eastern Railway Company at or before the time when the contract was made, i.e. before the ticket was purchased: Olley v Marlborough Court Hotel. The fact that a notice was on display in the booking office may satisfy this requirement if it was legible. It did point out that bookings were made subject to other conditions, and all customers had to do was ask and they would be given a copy. Since George cannot read he would not have been aware of the nature of this poster. However, George’s illiteracy would not be acceptable as an excuse for non- communication, since in these days of almost universal literacy, the objective test that the notice would be seen by a reasonable person would work in the company’s favour and illiteracy is a “misfortune not a privilege”: Thompson v LM&S Railway Company. It seems that if George had been able to read and not bothered to ask for a copy of the conditions, he would have been given notice of the rules which he had not read: L’Estrange v Graucob. There is no evidence of a previous course of dealing which would allow earlier knowledge to be imported into the present contract: Spurling v Bradshaw.
Notwithstanding the fact that notice of the exclusion clause may have been effectively communicated to a reasonable person, the question must still be asked as to whether the clause is reasonable. Next it can be argued that the clause is ambiguous and does not cover the event. The clause makes no mention of excluding liability for negligence, but seems to be confirming that the company will not be liable when it is not at fault. (“…items lost…” (by customers?) “…or stolen.”
(the fault of the thief). No mention of the company’s negligence.
Section 2(2) of the Unfair Contract Terms Act 1977(UCTA) states that a term purporting to exclude liability for loss or damage to property arising from negligence must satisfy the test of reasonableness. Furthermore s13 of the Supply of Goods and Services Act 1982 requires that services be provided with reasonable care and skill, which does not seem to be the case here. Exclusion of this section is also subject to a test of reasonableness according to s3 of the 1977 Act. In this case the loss of George’s camera arose from the fact that the bus driver negligently left the door unlocked, thereby failing in his duty of care to the passengers. Should the company be able to avoid liability for this negligence? Factors which would be taken into account under s.11 and Schedule 2 of UCTA and in determining whether the exclusion term is reasonable would be the fact that the contract was made between parties of equal bargaining power (supports the coach co) using standard pre-printed terms, (supports George), the possibility of insurance (may help the coach co) and the improbability that George would have been able to enter a similar contract with another bus company since they all impose similar terms (supports George). (Woodman v Photo Trade Processing (1981)). It seems that a court would be more likely to find in George’s favour on the basis that excluding liability for the driver’s negligence does not satisfy the test of reasonableness.