Introduction to Business Law Essay Example

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Case Study 5

Introduction Business Law

Black Tie Dry cleaning has in this used exclusion clauses at the back of the ticket. Some traders might use this kind of clauses to try and escape liability by saying they accept no liability in the event of damage. Such terms are not illegal but only a court can decide if such terms are unfair. Generally, any exclusion of liability is always void whether in notice or in contract terms as long as it is evading liability for any personal injury caused by negligence. Such terms are not enforceable if a court finds them unfair. As seen in the case of Curtis v Chemical Cleaning and Dyeing Co.1, P took a white satin dress trimmed with beads and sequins to the drycleaner. An assistant at the drycleaner asked P to sign a receipt for the dress. The receipt said that the drycleaner could not accept liability for damage of the beads and sequins signed and it turned out that the receipt exempted the dry cleaner from any damage or loss to the dress. After dry cleaning, there was a stain on the dress. P was able to claim the damages since the assistant had misrepresented the facts to state that the clause applied only to beads and sequins. This would be the case whether P had signed it or not. In some cases where the receipt has been signed, the court may decide that the document was a receipt and not contractual document.

In another case involving Causer v Browne, Causer left a dress with a dry cleaner2. The dress returned stained and Causer was able to claim damages. The dry cleaners defense that there was an exception clause was rejected by the court. The court decided that the receipt was not a contractual document containing legal terms including the exemption clause. Today, the dry cleaner may be now liable under the Australian Consumer Law for misleading or deceptive conduct or even false misrepresentations. Any unusual conditions imposed by a contract must be clearly brought to the customer’s attention for them to be effective. Fiona did not notice the clause and hence the terms were not made clear to her. As a consumer, Fiona is protected against unfair standard terms in contracts. The fact that Fiona did not see the terms means that the contract should not be effective. The exclusion in this case was in form of a notice. It was therefore unsigned. Reasonably sufficient notice is required to be given which in this case was not availed. Fiona is therefore entitled to compensation for damages by Black Tie Dyeing Co.

It is important to note that exception clauses provide that one party will not be liable in certain circumstances. They limit or defeat liability. They are not illegal and courts have repeatedly tried to look for ways to cut them down. Incorporation of an exemption clause in a contract can be by signature or clear and express notice to the contracting parties. Timing of the notice should be given consideration since notice given after the contract is considered void by the court. The person making the clause should make sure that the terms are clear to avoid any ambiguities that may occur. Fair dealing is also expected of parties to contract3.In the implementation and incorporation of the exclusion clauses, there is a requirement of reasonableness. It implies that the term should have been a fair and reasonable one in regard to circumstances present at the time of the contract4. The bargaining strengths of the parties to the contract should be considered and the customer should be aware of the full extent of the term. A party to a contract may disguise an exclusion clause while the real effect of the clause is to actually exclude liability. Such clauses make the liability or its enforcement subject to certain restrictive conditions. They also restrict the right or remedy in respect of the liability of pursuing any right or remedy whatsoever. Such clauses are void and such unfair terms are not binding on the customer. Fiona is not therefore bound by the contract implied by the drycleaners. Black Tie Dyeing Co. cannot therefore escape liability.

Even if there are no reasonable terms or any reasonable notice, it is possible to incorporate terms if there was an established course of dealings between Fiona and the drycleaners. In simpler terms, if the parties have contracted in certain terms in the past, it will not matter if on one particular occasion they fail to incorporate those terms into the contract in the usual way. In Hardwick Game Farm v Suffolk AA5, the parties were in a contract before three or four times every month for a period of three years that excluded liability on the part of the seller for latent defects in pheasant food. On one occasion the food contained poison and the sellers sought to rely on the exclusion clause. The court held that the terms could not be considered as incorporated since on this particular occasion, they had been notified by the buyer after the contract had been formed. The terms however were incorporated by the long course opf dealing between the parties. It was therefore reasonable to assume that the parties were contracting on the same grounds they were used to. In this case the law tries to protect the consumer who always has a lesser bargaining power and is usually prone to unfair clauses. A reason that the court ruled in favor of Hollier was the fact that it wanted to protect him from the unfair clause imposed on him and one that tried to exclude liability of the drycleaners. The same case will apply to Fiona and this means that it makes no difference if she was a regular customer of Black Tie Dyeing Co. In a nutshell, Fiona is entitled to compensation whether or not she had contracted with them before or not.


Curtis v Chemical Cleaning and Dyeing Co. [1952]1 KB 85

Causer v Browne [1952] VLR 1

Hardwick Game Farm v Suffolk [1969] VLR 11

Latimer Stephen, Australian Business Law (CCH Australia Publishers

Ltd., 2011)30

Tufal Asif, Exclusion and Limiting Clauses (Cavendish Publishers,

1Curtis v Chemical Cleaning and Dyeing Co. [1952]1 KB 85.

Causer v Browne [1952] VLR 1.

3 Stephen Latimer, Australian Business Law (CCH Australia Publishers Ltd., 2011)30.

4 Asif Tufal, Exclusion and Limiting Clauses (Cavendish Publishers, 2011)11.

Hardwick Game Farm v Suffolk [1969] VLR 11