Once it has been confirmed that both parties knowing entered into a legally binding relationship, it will then be necessary to determine whether Harry is bound by the words of the exclusion clause stated on the back f the receipt and on Smooth Sailings website. For a contract between two parties to be binding, three essential elements must be satisfied. An offer has to be put forward and accepted for which consideration is given, both parties must have the intention to create a legally binding relationship and there must be certainty of terms listed in the contract.
From the information provided about the business agreement between Hit the Harbor and Smooth Sailing, it is evident that Barney’s offer to fix Harry engine in return for payment was accepted when Harry received the receipt. Unlike other asses the offer and the acceptance is perfectly clear as the acceptance was widely communicated when Harry accepted the receipt and left the engine at Smooth Sailing to be repaired. Therefore, this agreement between Hit the Harbor and Smooth Sailing has satisfied three out of the four essential elements of a contract. The final element that needs to be satisfied is intention.
Under contract law, both parties must have had the intention to be legally bound by the contracts terms and conditions. It is often difficult to test the parties intention since it’s objective and often a question of interpretation of the rods used in the construction of the agreement . To help determine whether intention exists, the courts will either presume the parties had no intention to be legally bound if it’s a domestic, social, family or voluntary agreement, or alternatively, they will assume the participants intended the contract to be binding if it’s a commercial or business agreement.
These presumptions can be overturned if there is evidence to the contrary available. In Rose & Frank Co v JAR Crampon & Pros Ltd (1925) the Court of Appeal awarded a dissenting judgment that the parties were only undertaking a ‘honorable pledge’ which roved to be sufficient evidence to overrule the presumed intention. Since this contract is oral and the two parties are corporations participating in a business agreement, the courts will presume that Hit the Harbor and Smooth Sailing had the intention to make a legally binding contract.
Unlike Rose & Frank Co v JAR Crampon & Pros Ltd there is no presence of evidence to the contrary. Therefore, it can be concluded that all the vital elements necessary for a contract to be created have been satisfied and thus, a contract between Hit and Harbor ND Smooth Sailing existed. Contracts are an agreement between two or more parties for which there is a promise for one party to do something in return for a valuable benefit known as consideration.
The main term in the contract between Hit the Harbor and Smooth Sailing is the letters obligation to fix the engine by the completion date specified on the receipt in return for payment. Harry failed to communicate the importance of having the engine ready by the repair date so he could continue with his booking to take Sir Elton John on a tour of the harbor. After the engine as stolen, Harry also didn’t take steps to minimize his financial loss by hiring a dingy allowing his tour with Sir Elton John to continue.
In this situation, seeing that Harry didn’t inform Smooth Sailing of how critical it was for the engine to be back in Hit the Harbors possession, it would not be reasonable to assume Smooth Sailing would have known the urgency for the engine to be fixed. Where a contract is an unsigned document, such as a tickets or receipt, the court has to determine whether a reasonable person would assume the document exchanged to be part of the contract. Only in the situation where the document has been found to be a part of the contract by a reasonable person, the exclusion clause in the document will be able to be relied on.
However, it is the responsibility of the party who wrote the clause to take steps to ensure the customer is aware of the exclusion clause. In the case of Chaperon v Barry Urban District Council (1 940), it was ruled that a reasonable person would not consider the mere act of handing the plaintiff a receipt sufficient notice of the exclusion clause. In order to determine whether the exclusion clause written on the back of the receipt and ousted on Smooth Sailing’s website will exclude Smooth Sailing from liability, it has to be deduced whether sufficient notice of the exclusion clause was given before the contract was made.
Since this was an oral contract and no documents were signed, it then has to be ascertained whether sufficient notice of the clause was given before the contract was accepted and whether it would be assumed by a reasonable person to be a contractual document. If it is revealed that the exclusion clause remains binding, it will be essential to verify whether the clause was ambiguous, in which case the court will interpret the clause against Smooth Sailing. It can be argued that notice of the exclusion clause was given to Harry when he received the receipt from Smooth Sailings desk clerk.
In the case of Thornton v Shoe Lane Parking Pity. Ltd. (1971), it was acknowledged that only the terms that are brought to the customer’s attention before accepting the contract, taking a ticket, are binding. It was ruled that the defendant failed to take appropriate actions to make the driver aware of the clause beforehand and the company would still be liable despite the exclusion clause. In light of the outcome of that case, it must be determined whether the Smooth Sailing ad taken sufficient steps to make Harry aware of the exclusion clause before accepting the contract.
The information provided reveals that the clause isn’t specifically displayed anywhere around the shop however, on counter in the sales area, a small sign directs customers to visit the website which the exclusion clause appears. The case Bellman New Ferry Co Ltd v Robertson (1906) addresses a similar issue for which the court ruled that regardless of the sign that displayed the exclusion clause, the defendant was a regular commuter on the ferry and must have known the terms and conditions of entry when he purchased his ickiest.
Alike to this judgment, the court found that in Spurning Ltd v Bradshaw (1956) the frequent nature of the dealings between the two parties was sufficient to allow the exclusion clause to be enforceable. The defendant couldn’t rely on not having read the exclusion clause since he had the opportunity to read the terms of business over past business dealings. However, in Unconcern v David Encumbrance Ltd (1964) it was found that the plaintiff did not participate in regular business dealings with the defendant and thus it wasn’t reasonable to assume Unconcern was accustomed to the exclusion clause specified on he risk notice.
Therefore the regularity of the business dealing between Hit the Harbor and Smooth Sailing will determine whether Harry should have been aware of the clause on the receipt. In the information provided it is revealed that Hit the Harbor was in fact a regular customer of Smooth Sailing. Furthermore, it is reasonable to assume Harry should have known Smooth Sailings terms and conditions due to their prior business dealings.
From the cases addressed above and my knowledge of the law, I would be inclined to assume the court would rule that Harry was made aware of Smooth Sailing’s exclusion clause before entering into the contract and thus the clause is in fact a term of the contract. If this were so, Smooth Sailing would be exempt from liability for the stolen engine and Hit the Harbors case would be better suited towards a negligence suit. The last avenue off valid contract that needs to be examined is the wording of the clause.
If ambiguous, the court will interpret the clause against Smooth Sailing, in favor of Hit the Harbor. For a clause to be deemed ambiguous, the wording must be unclear or be phrased in such a way that allows multiple interpretations. In cases such as White v John Warwick (1953) and Glenn v Marketers (1 893), the clauses were ruled to be ambiguous and in both instances, the judge interpreted the clause in favor of the party that didn’t right the clause. However, the wording of the clause written by Smooth Sailing appears to be very straightforward.
It explicitly outlines that the owner leaves any property at Smooth Sailing at their own risk, regardless of the extent of loss or damage that may have been caused. Due to the precise and specific wording of the clause, it would be unable to claim that the clause was ambiguous. After loosely examining all the information put forward in the question, I can conclude that there was in fact an unsigned contract between Hit the Harbor and Smooth Sailing. This contract was based on the agreement that Smooth Sailing would repair Hit the Harbors engine by the listed date.
After acknowledging the existence of the contract, it was then deduced that the exclusion clause written on the back of the receipt received by Harry was incorporated into the contract. Even though the notice on the sales counter only directed customers to the website to read the exclusion clause, the regularity of Hardy’s dealings tit Smooth Sailing would have led a reasonable person to believe that Harry should have known about the clause from their past business dealings.
It is my expert opinion that Harry is bound by the words on the back of the receipt and would therefore be unable to claim compensation if he were to proceed in this suit. However, since Smooth Sailing’s repair clerk acted in a negligent manner when he failed to securely lock the back door to the workshop on the night of the robbery,
