Hollier v Rambler Motors (AMC) Ltd [1971]
Court: Court of Appeal
Facts: Walter Hollier engaged Rambler Motors, an automobile repair shop, for services on multiple occasions over a five-year period. Each time, he signed an invoice containing an exclusion clause that exempted the company from liability for fire damage. On this particular occasion, Hollier did not sign the invoice. A fire, caused by faulty wiring in the garage, destroyed Hollier’s car. Hollier sued Rambler Motors for the loss of his car.
Issue: Whether the exclusion clause, typically signed in prior transactions, was incorporated into the contract despite Hollier not signing on this occasion, and whether the clause effectively excluded liability for negligence.
Held: The Court of Appeal ruled that the exclusion clause was not incorporated into the contract due to the lack of a consistent course of dealing. Additionally, even if the clause were incorporated, it would not effectively exclude liability for negligence. The court applied the contra proferentum rule, interpreting the clause against the party relying on it due to its ambiguity.
Key Judicial Statements:
Lord Denning MR: Emphasised that the course of dealing must be regular for terms to be incorporated by that means. Three or four transactions over a five-year period were insufficient to establish a consistent pattern. He stressed the importance of clarity in exclusion clauses and highlighted that ambiguous terms should be interpreted in favour of the party who did not draft them.
Lord Justice Lawton: Reinforced that the exclusion clause did not clearly and explicitly exclude liability for negligence. The language of the clause must be plain and unambiguous to effectively exclude such liability. The court was cautious about allowing parties to escape liability through ambiguous terms.
💡 Leveluplaw: Highlights the need for regular and consistent dealings to incorporate terms through course of dealing. It underscores that exclusion clauses must be clearly drafted to be effective, particularly when seeking to exclude liability for negligence. The case illustrates the court's approach to ensuring fairness and clarity in contractual terms