J Spurling Ltd v Bradshaw
Court of Appeal
Citations: [1956] 1 WLR 461; [1956] 2 All ER 121; [1956] 1 Lloyd’s Rep 392; (1956) 100 SJ 317; [1956] CLY 525.
Facts
The defendant was a wholesale factor. The claimant were warehousemen. The parties had many previous dealings with each other. On one occasion, the defendant delivered eight barrels of orange juice to the claimant for storage.
A few days later, the claimant sent the defendant a ‘landing account’. The document stated that it had terms and conditions on the back. Those terms and conditions were in small print, but were legible. One of these terms excluded liability for the claimant’s negligence, wrongful acts or default. The defendant knew that the back of the landing account contained contractual terms, but did not read them.
The barrels were damaged in storage and the juice was lost. The claimant sued for their storage fees. The defendant counterclaimed for the damage to the barrels. In response to the counter-claim, the claimant sought to rely on the exclusion clause in the landing account. The defendant replied that the claimant had not given them sufficient notice of the clause. This would mean that the clause was not incorporated into the contract.
Issue(s)
- Was the exclusion clause part of the parties’ contract?
Decision
The court held in favour of the claimant. They had given the defendant sufficient notice of the exclusion clause. This was because the defendant was aware that there were terms on the back of the contract, and those terms were legible.
This Case is Authority For…
To incorporate an exclusion clause into a unsigned contract, the party relying on it must give the other reasonable notice of the clause. The court noted that the following factors are relevant to whether reasonable notice has been given:
- The more unreasonable the clause, the greater the degree of notice necessary;
- The more extreme the clause, the greater the degree of notice necessary;
- Where the parties have contracted on the same terms many times before, fewer steps need to be taken to alert them to the fact that the same exclusion clauses apply in future transactions. This factor was not applied in this case, however, since there was no evidence as to what terms the parties had previously contracted on.
It might be thought that this case conflicts with Thornton v Shoe Lane Parking [1971] 2 QB 163. In that case, the Court of Appeal held that for exclusion clauses, it is not enough that the other party is aware that the document contains contractual clauses. Instead, the party relying on the exclusion clause must give reasonable notice specifically that there is an exclusion clause within those terms.
A possible distinction between the cases is that Thornton involved a consumer, whereas this case involved two businesses. This would indicate that whether the other party is a business or consumer is relevant to how much notice must be given. Alternatively, the law may have changed since this case – Thornton was decided later.
Other
Lord Denning in this case advocated for a doctrine of fundamental breach. This doctrine held that a party could not rely on an exclusion clause if their breach entitled the other party to terminate the contract (a repudiatory breach). This doctrine was abolished in Suisse Atlantique Societe d’Armement Maritime SA v NV Rotterdamsche Kolen [1966] 1 Lloyd’s Rep 529. That case found that the effect of a fundamental breach depended on the proper construction of the particular exclusion clause.
