The Use of StandardForm Contracts

1
The Use of Standard-Form Contracts

• Contracts

2
Controlling Exclusionary Clauses in Standard-Form
Contracts

• What are standard-form contracts?
• Why do we use them?
• What are the problems with them?
• What is an exclusionary clause?

3
Controlling Exclusionary Clauses in Standard-Form
Contracts (contd)

• Why do we use them?
• What are the problems with them?
• If the issues between these two are different,
  why do they get lumped together in a single
  chapter in the book on contracts?

4
Controlling Exclusionary Clauses in Standard-Form
Contracts (contd)

• Ways to deal with standard-form contracts
• Notice in terms of unsigned documents (e.g.
  Parker, Union Steamship and Thornton)
• Reasonableness of clauses (e.g. Tilden and
  Interfoto)
• Misrepresentation (e.g. Curtis)
• Contractual Interpretation (e.g. Karroll)
• Notice in terms of signed documents (e.g. Tilden)
• Notice in terms of signed documents (e.g.
  Karroll, and Tilden)

5
Parker v. South Eastern Railway

• Two guys put bags into a cloak room, and paid
  money for it.
• The guys received a ticket for the return of the
  bag on presentation of the ticket.
• The ticket had, on its front, the notation to
  See back.
• On the back the ticket indicated that the limit
  of liability of the cloakroom was 10.

6
Parker v. South Eastern Railway (contd)

• There is no indication that the guys read the
  back of the ticket.
• When the ticket is presented the bag is lost and
  the company claims the benefit of the limitation
  of liability.
• The guys claim that they did not read the
  provision.

7
Parker v. South Eastern Railway

• With unsigned documents, the important concept is
  that of assent (paragraph 7)
• If a person does not know that there is writing,
  then he cannot assent to the terms therein
  contained
• If the person knows that there are conditions on
  the sheet, then he is bound

8
Parker v. South Eastern Railway (contd)

• If a person knows that there is writing but does
  not know that they are terms of the contract, the
  question becomes whether the reasonable person
  would have thought the writing contained terms of
  the contract. If so, then the party is bound.
  If not, then the party is not bound
• If you read them, and do not give it back, then
  you are bound (Bramwell, L.J.)
• Lord Justice Bramwell says that the plaintiffs
  must have known that there were conditions on the
  ticket, and therefore, they are probably bound

9
Thornton v. Shoe Lane Parking Ltd.

• The plaintiff parks in an automated-ticket
  parking garage. A ticket is dispensed by the
  machine. The plaintiff parked. The conditions
  on the premises exempt the defendant from all
  damage howsoever caused. The plaintiff is
  injured through, partly the fault of the
  defendant (paragraph 1).
• The ticket itself says that it is subject to the
  conditions on the premises (paragraph 2).

10
Thornton v. Shoe Lane Parking Ltd. (contd)

• The plaintiff did not read the ticket other than
  to see the time on it. There were many
  conditions on the premises (paragraph 3)
• The issue is a simple one Can the defendant
  rely on the condition on the premises?

11
Thornton v. Shoe Lane Parking Ltd. (contd)

• If a person knows that there is writing and that
  this writing contains terms of the contract, then
  the person is in general bound by those terms
  (para. 8, per Lord Denning, M.R. para 11, per
  Megaw, L.J.).
• If the customer knew of the exempting condition,
  then he is bound by it (para. 7, per Lord
  Denning, M.R.)

12
Thornton v. Shoe Lane Parking Ltd. (contd)

• If the other party did what was reasonably
  sufficient to give the customer notice, then the
  customer is bound (para. 7, per Lord Denning,
  M.R.).
• The need for red ink or a big hand (paragraph 7,
  per Lord Denning, M.R., paragraph 15, per Lord
  Justice Megaw).

13
Thornton v. Shoe Lane Parking Ltd. (contd)

• The matter can also be analyzed as a means of
  offer and acceptance. If the terms of the offer
  could not be known at the time of the acceptance,
  the acceptance is invalid (paragraph 6)
• The result might be different if we were not
  talking about personal injury (paragraph 4)

14
Interfoto Picture Library Ltd v. Stiletto Visual
Programmes Ltd.

• The plaintiff has a library of transparencies.
  The defendant needed some. An employee of the
  plaintiff sent 47 transparencies to the
  defendant. This was on March 5.
• The defendant said that one or two of the
  transparencies would be of interest to the
  defendant. Due to the inability of the plaintiff
  to get the message, the transparencies were not
  returned until April 2.
• The plaintiff charged a holding fee of 3,783.50
  to the defendant. This is based on the unsigned
  delivery note that was delivered with the
  transparencies

15
Interfoto Picture Library v. Stiletto Visual
Programmes Ltd. (contd)

• This is exorbitant. This could have been a
  penalty clause (which would have been
  unenforceable). But, this was not argued.
• Contract formation included the delivery note
  (para. 11)
• that where a condition is particularly onerous
  or unusual the party seeking to enforce it must
  show that that condition, or an unusual condition
  of that particular nature, was fairly brought to
  the notice of the other party. (para. 15)

16
Interfoto Picture Library v. Stiletto Visual
Programmes Ltd. (contd)

• Not restricted to exemption clauses (para. 16)
• Fairly brought to the attention of the other
  party (para. 18)
• Quantum meruit
• If the terms were common, this would be different
  (para. 25)
• The number of transparencies had not been
  requested

17
Union Steamship Ltd. v. Barnes

• The ship line brought the respondent and his
  family aboard by means of a sling. After
  bringing them aboard, the ship left the harbour.
  The respondent went to buy tickets for his family
  at this point.
• There was a line that might have been for
  signature. The document was never signed.

18
Union Steamship Ltd. v. Barnes (contd)

• The respondent had traveled with the appellant
  many times. He was educated to secondary school
  (paragraph 18)
• There is a reference to other conditions being
  posted at the ship lines offices, but in the
  absence of evidence, that is irrelevant
  (paragraph 24)

19
Union Steamship Ltd. v. Barnes (contd)

• Majority
• Since the thing was not signed, did he have a
  reasonable opportunity to read it
• There is only one condition (paragraph 22)
• It is in red letters
• There was no evidence of poor lighting (paragraph
  23)
• Common awareness of exempting conditions
  (paragraph 25)

20
Union Steamship Ltd. v. Barnes (contd)

• Majority
• Since there was a finding at trial that a
  reasonable attempt was made, this covers off the
  matter (paragraph 26)
• If what the company did was sufficient notice,
  then the parties are bound, even if the other
  party did not know that there was writing
  (paragraph 29)

21
Union Steamship Ltd. v. Barnes (contd)

• Dissent
• The respondent did not have time to actually read
  the ticket (paragraph 4)
• This is a special limiting condition that could
  not have been anticipated (paragraph 5)
• This is virtual deception of passengers
  (paragraph 7)

22
Curtis v. Chemical Cleaning Dyeing Co.

• The plaintiff needed a weeding dress cleaned.
  She brought it in and was asked to sign the
  receipt because the defendants would not accept
  liability for certain specified risks, including
  the risk of damage by or to the beads and sequins
  with which the dress was trimmed.
• There was a serious unexplained stain,
• The finding of the trial judge was that the beads
  were not used as an example, but were exhaustive.

23
Curtis v. Chemical Cleaning Dyeing Co. (contd)

• If there is a misrepresentation as to the extent
  or applicability of an exemption clause, then the
  exemption clause cannot be relied upon (paragraph
  9)
• A failure to draw attention to the exemption
  clause to the attention may be problematic
  (paragraph 12)
• If you mislead the other party, it is a
  misrepresentation (paragraph 13)
• The distinction between law and equity (paragraph
  15)

24
Notice (contd)

• Tilden Rent-A-Car Co. v. Clendenning
• 1978 Ontario Court of Appeal
• Mr. Clendenning is an experienced traveler who
  rents a car in Vancouver. Mr. Clendenning signed
  a contract with Tilden. He took the extra
  insurance coverage (paragraph 1).
• He says that the insurance was saying that he was
  covered unless he could not control the car
  (paragraph 7). Then, Mr. Clendenning gets into
  an accident. Mr. Clendenning pleads guilty to
  drunk driving.

25
Notice (contd)

• Tilden Rent-A-Car Co. v. Clendenning
• Facts (contd)
• There is a provision in the contract (faint, and
  in small print) that says that if the renter
  breaks any law, or is intoxicated to even the
  smallest degree, then the insurance coverage is
  no good.
• Issue
• Can Tilden rely on the provision?

26
Notice (contd)

• Holdings
• The rule in LEstrange (paragraph 12)
• Objective intention
• However, the rule may not apply where the other
  party knows that the signing party does not
  assent to the terms (paragraph 15)

27
Notice (contd)

• Holdings (contd)
• There are certain things that make this different
  from other contracts
• Speed (paragraph 18)
• Informality (paragraph 18)
• Inconsistency with the overall purpose (paragraph
  19)
• Make believe (paragraph 20)
• The ignorant v. liars tightrope (paragraph 23)

28
Notice (contd)

• Holdings (contd)
• Where the terms are onerous, care must be taken
  to draw them to the attention of the signing
  party (paragraph 27)
• Dissent
• Not difficult to read (the majority thought it
  was faint) (paragraph 37)

29
Notice (contd)

• Holdings (contd)
• Dissent (contd)
• Not a technical breach (paragraph 38)
• No misrepresentation (paragraph 42)
• No discussion of reasonableness (paragraph 49)
• Not unusual or oppressive (paragraph 55)

30
Notice (contd)

• Karroll v. Silver Star Mountain Resorts Ltd.
• 1986 British Columbia Supreme Court
• Facts
• Karroll is a skier. She entered a downhill ski
  race run by the defendant. There was another
  skier on the course, and the plaintiff was
  injured as a result. If that were all there was,
  it might be hard for the defendant to escape
  liability.

31
Notice (contd)

• Karroll v. Silver Star Mountain Resorts Ltd.
  (contd)
• Facts (contd)
• The plaintiff knew what the release was about
  (paragraph 8)
• The plaintiff may have read the top section of
  the release, but did not read the release itself
  (paragraph 9).
• Issues
• Is the plaintiff bound?
• Does it cover what happened?

32
Notice (contd)

• Holdings
• With a signed document, LEstrange v. Graucob
  remains the general rule (paragraph 17)
• There are two exceptions to this rule (paragraph
  17)
• Non Est Factum
• Misrepresentation
• Tilden Rent-a-Car v. Clendenning (paragraph 20)
• Inconsistency

33
Notice (contd)

• Holdings (contd)
• In the normal situation, drawing attention not
  necessary (paragraph 24)
• However, if circumstances exist that would lead a
  reasonable person to believe that the signing
  party did not consent, then there may be a
  requirement to bring it to the attention of the
  other party (paragraph 26)

34
Notice (contd)

• Holdings (contd)
• The effect of the exclusion clause on the other
  terms of the contract
• The normal expectations of parties in the
  situation
• The length of the contract
• The time available to read it
• The size of the print

35
Cases (contd)

• Karroll v. Silver Star Mountain Resorts Ltd.
  (contd)
• She knew what the document was about (paragraph
  26)
• She had been in the race before (paragraph 7)
• This is dangerous (paragraph 27)
• The release was short (paragraph 28)
• No fine print (paragraph 28)
• Privity