1

THE EFFECTS OF EXCLUSION CLAUSES

by

A VIJAYALAKSHMI VENUGOPAL

LLB (Hons) (London), CLP, MEd (Malaya), Advocate & Solicitor

[2002] CLJ liii

Intellectual Property

Malaysia

Nature

An exclusion clause is a term that is inserted in a contract or other document with the purpose

of excluding or limiting liability which would arise unless the exclusion clause was:

(i) valid as will be discussed below, there are a number of factors the court takes into account when called on to consider the validity of an exclusion clause, and

(ii) applicable the party intending to rely on the exclusion clause may also have to prove that the particular exclusion clause in question is applicable to the nature of liability the party

is seeking to avoid. For example, the party relying on the clause may allege that the clause

exempts the party from liability in breach of contract and negligence whereas the court may

decide that the clause only affects one of those two liabilities.

P.S. Atiyah1 observed that:

An exemption clause may take many forms, but all such clauses have one thing in common in that they exempt a

party from liability which he would have borne had it not been for the clause.

G.H.L. Fridman2 notes:

Such a clause3 excludes or modifies contractual obligations. It affects the nature and scope of a party's

performance.

It has been stated in Halsbury's Laws of England4 that:

It is common, particularly in standard form contracts, for one or more parties to seek to exclude or limit liability

for breach of contract or misrepresentation which would otherwise be imposed upon him.

Visu Sinnadurai5 writes:

There has, however, only been very few decisions by Malaysian Court concerning the application of exemption

clauses. This paucity of cases should not be taken as an indication of the extent to which such clauses are being

used in this country. In fact, over the recent years, the use of exemption clauses in contracts have become

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widespread.

The burden of proof lies on:

(i) the party claiming compensation for loss and/or damage to prove that the loss and/or damage was occasioned by the defendant, and

(ii) the party relying on the exclusion clause to prove that the loss and/or damage claimed is excused by the clause.

J Beatson6 writes:

The party seeking to rely on an exemption clause must show that the loss or damage to the other party is within

the scope of the clause. But the other party must first plead and prove that the loss or damage which has been

sustained was caused by some breach of contract or duty on the part of the defendant.

A party seeking to rely on an exclusion clause may insert such a clause in almost any

document given to the other party from a contract to a receipt. The party relying on the clause

usually alleges that the other party had notice of the clause as it was in the document handed

to the other party. The problem with this argument is that very often, the other party who

receives the document that contains the exclusion clause does not read or understand the

clause. This party usually only realises the effect of the clause once loss has occurred and

liability is disputed.

Syed Ahmad Alsagoff writes:

These (exclusion) clauses may appear in printed tickets, notices or receipts which are brought to the customers'

attention at the time of the agreement which, in most cases, the consumer has no time or energy to read the

printed words. Even if he reads them, he would probably not understand them. It is only when a dispute arises

that the consumer realises how much of his rights have been excluded by these clauses.7

Andrew Phang Boon Leong writes:

The common law has long been familiar with the attempt of one party to a contract to insert terms excluding or

limited liabilities which would otherwise be his. The situation frequently arises where a document purporting to

express the terms of the contract is delivered to one of the parties and is not read by him.8

Lord Reid in the House of Lords in Suisse Atlantique Societe D' Armement Maritime S.A. v. N.

V. Rotterdamsche Kolen Centrale9 explains:

Exemption clauses differ greatly in many respects. Probably the most objectionable are found in the complex

conditions which are now so common. In the ordinary way the customer has no time to read them, and if he did

read them he would probably not understand them. And if he did understand and object to any of them, he would

generally be told he could take it or leave it. And if he then went to another supplier the result would be the same.

Freedom of contract must surely imply some choice or room for bargaining.

Exclusion clauses have been drafted in exceedingly wide terms which seem to exclude almost

any and all liability. Even if the party against whom this exclusion clause will operate does

know of the existence of the clause, that person is often in too weak a bargaining position to

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object to the clause.

Tommy Thomas10 explains that:

Clauses which absolve a party to a contract from liability for breaking it are no doubt unpopular, particularly

when they are unfair. The common law is founded on the premise that parties are free to bargain and enter into a

contract on whatever terms they wish to. However in reality what is crucial is their bargaining power. The parties

seldom deal on equal terms. In today's commercial world the consumer if he wishes to buy a product or obtain a

service has to accept the terms and conditions of a standard contract prepared by the other party, usually with the

assistance of legal expertise.

Lum Kit-Wye, Victor Yeo and Low Kee Yang11 write:

Exemption clauses may result in injustice, especially if they are allowed to operate freely against consumers or

parties who are in a weaker bargaining position. Such persons may not be in a position to freely negotiate against

the inclusion or the extent of such clauses in their contracts.

Common Law

The source of the law in this area is from cases. As Syed Ahmad Alsagoff12 comments:

The Contracts Act 195013 contains no provision dealing with exemption clauses. The Malaysian courts have

followed English common law when considering this aspect of the law.

Dato' Visu Sinnadurai14 similarly writes:

There is a dearth of cases dealing with exemption clauses in consumer transactions in Malaysia and Singapore.

The Malaysian and Singapore courts are likely to follow English common law when considering this aspect of

law.

Notice Must Be Contemporaneous With The Contract

The party seeking to rely on an exclusion clause alleges that the other party had notice of the

clause and since that party did not object to the clause, the clause should be binding on the

other party. For this argument to find favour, then, the party against whom the exclusion

clause will operate must have had notice of the clause before the contract was concluded as

that party must have had an opportunity to object to the clause before the clause became

binding.

Syed Ahmad Alsagoffi15 explains:

For an exemption clause to be effective, it must be brought to the notice of the contracting parties before or at the

time the contract is made.

The case of Olley v. Marlborough Court Limited,16 the Court of Appeal interpreted the effect

of an exclusion clause put in a notice in a hotel bedroom. This notice stated that:

The proprietors will not hold themselves responsible for articles lost or stolen, unless handed to the manageress

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for safe custody. Valuables should be deposited for safe custody in a sealed package and a receipt obtained.17

In this case, a couple, in accordance with the custom of the hotel, paid for a week's stay in

advance and only saw this notice on arrival in their room. The wife in this case placed their

room key on a hook in the reception office when the couple stepped out of the hotel. Their key

was taken from this hook and valuables were stolen from their room. The couple sued the

hotel company for negligence and the hotel company sought to rely on the exclusion clause in

the notice to exempt themselves from liability.

Singleton LJ, in this case, concluded:

If the defendants, who would prima facie be liable for their own negligence, seek to exempt themselves by words

of some kind, they must show, first, that the words form part of the contract between the parties It is clear that when the plaintiff and her husband went to the hotel they had not seen the notice. Apparently, by the custom of

the hotel, they were asked to pay a week in advance, and when they went to the bedroom for the first time they

had not seen the notice, and the words at the head of the notice could not be part of the contract between the

parties.18

Denning LJ concluded that:

Now people who rely on a contract to exempt themselves from their common law liability19must prove that

contract strictly. Not only must the terms of the contract be clearly proved, but also the intention to create legal

relations the intention to be legally bound must also be proved. The best way of proving it is by a written document signed by the party to be bound. Another is by handing him before or at the time of the contract a

written notice specifying its terms and making it clear to him that the contract is on those terms. A prominent

public notice which is plain for him to see when he makes the contract or an express oral stipulation would, no

doubt, have the same effect. But nothing short of these three ways will suffice. So, also, in my opinion, notices put up in bedrooms do not of themselves make a contract. As a rule, the guest does not see them until

after he has been accepted as a guest. The hotel company no doubt hope that the guest will he held bound by

them, but the hope is vain unless they clearly show that he agreed to be bound by them, which is rarely the

case.20

In Thornton v. Shoe Lane Parking Ltd,21 the plaintiff went to park at a multi-storey automatic

car park owned by the defendant. He had never gone there before. There was a notice on the

outside which bore a statement that 'All cars parked at owners risk'. There was no man at the

entrance. As he drove in, a ticket was pushed out from a machine.

The ticket had a notice that 'This ticket is issued subject to the conditions of issue displayed on

the premises.' The ticket also stated that the customer should present the ticket to the cashier to

claim his car.

Exclusion clauses were also displayed on a pillar opposite the ticket machine and in the

paying office.

There was an accident in the car park premises and the defendant attempted to rely on the

exclusion clauses to exempt themselves from liability. The plaintiff admitted that he looked at

the ticket to see the time printed on it but did not read the other printed words he saw.

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Lord Denning MR in the Court of Appeal clarified:

We have been referred to the ticket cases of former times from Parker v. South Eastern Ry Co22 to McCutcheon

v. David MacBrayne Ltd.23 They were concerned with railways, steamships and cloakrooms where booking

clerks issued tickets to customers who took them away without reading them. In those cases the issue of the ticket

was regarded as an offer by the company. If the customer took it and retained it without objection, his act was

regarded as an acceptance of the offer: see Watkins v. Rymill24 and Thompson v. London, Midland and Scottish

Ry Co.25 These cases were based on the theory that the customer, on being handed the ticket, could refuse it and

decline to enter into a contract on those terms. He could ask for his money back. That theory was, of course, a

fiction. No customer in a thousand ever read the conditions. If he had stopped to do so, he would have missed the

train or the boat.

None of those cases has any application to a ticket which is issued by an automatic machine.

The customer pays his money and gets a ticket. He cannot refuse it. He cannot get his money

back. He may protest to the machine, even swear at it; but it will remain unmoved. He is

committed beyond recall. He was committed at the very moment when he put his money into

the machine. The contract was concluded at that time. It can be translated into offer and

acceptance in this way. The offer is made when the proprietor of the machine holds it out as

being ready to receive the money. The acceptance takes place when the customer puts his

money into the slot. The terms of the offer are contained in the notice placed on or near the

machine stating what is offered for the money. The customer is bound by those terms as long

as they are sufficiently brought to his notice beforehand, but not otherwise. He is not bound by

the terms printed on the ticket if they differ from the notice, because the ticket comes too late.

The contract has already been made: see Olley v. Marlborough Court Ltd.26 The ticket is no more than a voucher or receipt for the money that has been paid (as in the deckchair case, Chapleton v. Barry Urban

District Council27), on terms which have been offered and accepted before the ticket is issued. In the present case

the offer was contained in the notice at the entrance giving the charges for garaging and saying 'at owners risk',

ie, at the risk of the owner so far as damage to the car was concerned. The offer was accepted when the plaintiff

drove up to the entrance and, by the movement of his car, turned the light from red to green, and the ticket was

thrust at him. The contract was then concluded, and it could not be altered by any words printed on the ticket

itself.28

Sir Gordon Willmer in this case observed:

It seems to me that the really distinguishing feature of this case is the fact that the ticket on which the reliance is

placed was issued out of an automatic machine. I think it is right to say at any rate, it is the fact so far as the cases that have been called to our attention are concerned that in all the previous so-called 'ticket cases' the ticket has been proffered by a human hand, and there has always been at least the notional opportunity for the

customer to say, if he did not like the conditions: 'I do not like your conditions. I will not have this ticket.' But in

the case of a ticket which is proffered by an automatic machine, there is something quite irrevocable about the

process. There can be no locus poenitentiae. it seems to me that any attempt to introduce conditions after the irrevocable step has been taken if causing the machine to operate must be doomed to failure. if one does desire to impose on one's customers stringent conditions such as these, the least one can do is to post a prominent notice

at the entrance to the premises, warning one's customers that there are conditions which will apply.29

With regard to the effect of the other notices of the exclusion clauses displayed in the

premises, Megaw LJ in this case held:

It does not take much imagination to picture the indignation of the defendants if their potential customers, having

taken their tickets and observed the reference therein to contractual conditions which, they said, could be seen in

notices on the premises, were one after the other to get out of their cars, leaving the cars blocking the entrances to

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the garage, in order to search for, find and peruse the notices! Yet, unless the defendants genuinely intended the

potential customers should do just that, it would be fiction, if not farce, to treat those customers as persons who

have been given a fair opportunity, before the contracts are made, of discovering the conditions by which they are

to be bound.30

In the case of tickets issued by automatic machines, it seems that giving the customer due

notice of conditions printed on the ticket will be to no avail. The contract is concluded once

the money is put into the machine.

This rule is the same as when the ticket is issued by people such as when:

Assuming, however, that an automatic machine is a booking clerk in disguise, so that the old fashioned ticket

cases still apply to it .

Whether the ticket is issued by a person or a machine, for exclusion clauses to be effective,

they must be brought to notice before the contract is concluded. There is just an added touch

of 'finality' when the document containing the exclusion clause is issued by a machine which

is unlikely to yield to even the most fervent efforts in negotiation short of property damage to

the machine.

In Goh Gok Hoon v. Eusuff Bros Sdn. Bhd. & Ors.31 the High Court considered the effect of a

clause contained in receipts for payment of rent which the appellant alleged were binding on

the first respondent. The premises belonging to the appellant was let to the first respondent on

1 October 1959. There was no written contract to this effect. The only available documentary

evidence of this transaction was contained in a letter from the first respondent to the appellant

confirming that the first appellant agreed to rent the premises from the appellant for a monthly

rent of RM125. The receipts for payment of rent, however, contained a clause which stated:

No subtenancy or charge of tenancy will be allowed or recognized without the written consent of the landlord to

that effect.32

In June 1971, the third respondent and his son took over the tenancy from the first respondent

although the rent continued to be paid by the first respondent and the receipts were issued in

the name of the first respondent.

Wan Yahya J concluded with regard to the legal effect of the clause on subtenancy in the

receipts that:

he33 concluded that the restriction on subletting was conveyed to the first respondent only after the tenancy agreement had been concluded and therefore the first respondent had no notice of it at the time when he wrote the

letter of acceptance. I therefore agree and accept the fact as found by the learned President that (the) prohibition against subletting did not form a term of the oral contract and consequently the first respondent was

not bound by such a restriction.34

In Ghee Seng Motor v. Ling Sie Ting,35 Haji Abdul Kadir bin Sulaiman J in the High Court

held that:

The exemption clause if at all an exception clause is contained in the disputed exhibit D1(a) tendered by the

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defendant. So it is for the defendant to satisfy the Court that it was in fact given to the plaintiff. Each case depends on the facts and circumstances of the case and in this case I am satisfied that the provisions of the

exemption clause were never brought to the attention of the plaintiff and the plaintiff was not aware of the

existence of the clause.36

The defendant in this case failed to prove that the plaintiff had notice of the exclusion clause

before the contract was formed and as such, could not rely on the clause.

Notice Must Be Reasonably Sufficient

Signed Documents

The exclusion clause may be contained in a document that is signed by the party against

whom the clause will operate. In such a case, the party who signs the document is deemed to

know its contents including the clause. The exceptions to this rule are fraud and

misrepresentation.

The plaintiff in L'estrange v. F. Graucob, Limited37 was the owner of a caf. The plaintiff

entered into a written contract with the defendant for the defendant to supply the plaintiff an

automatic slot machine. The plaintiff alleged that there the defendant breached an implied

warranty as the slot machine delivered was unfit for the purpose intended. The defendant

disagreed with this allegation.

There was a clause in the contract which stated that:

This agreement contains all the terms and conditions under which I agree to purchase the machine specified

above and any express or implied condition, statement, or warranty, statutory or otherwise not stated herein is

hereby excluded.38

Scrutton LJ, after referring to the cases of Richardson, Spence & Co. and the "Lord Gough"

Steamship Company, Limited v. Minnie Rowntree39 and Parker v. The South Eastern Railway

Company; Gabell v. The South Eastern Railway Company40 stated that:

In cases in which the contract is contained in a railway ticket or other unsigned document, it is necessary to prove

that an alleged part was aware, or ought to have been aware, of its terms and conditions. These cases have no

application when the document is signed. When a document containing contractual terms is signed, then, in the

absence of fraud, or, I will add, misrepresentation, the party signing it is bound, and it is wholly immaterial

whether he has read the document or not.41

In this case, the plaintiff has signed a document headed 'sales agreement,' which she admits

had to do with an intended purchase, and which contained a clause excluding all conditions

and warranties. That being so, the plaintiff, having put her signature to the document and not

having been induced to do so by any fraud or misrepresentation, cannot be heard to say that

she is not bound by the terms of the document because she has not read them.42

Maugham LJ in this case pointed to the fact that the contract was not in a formal character

such as a deed but rather in a 'brown paper document'43 and also that:

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It was an elaborate form containing a number of clauses, and among them certain terms and conditions in

regrettably small print but legible.44

Maugham LJ stated that despite reservations:

I regret the decision to which I have come, but I am bound by legal rules and cannot decide the case on other

considerations.45

In this case it is, in my view, an irrelevant circumstance that the plaintiff did not read, or hear

of, the parts of the sales document which are in small print, and that document should have

effect according to its terms. I may add, however, that I could wish that the contract had been

in a simpler and more usual form. It is unfortunate that the important clause excluding

conditions and warranties is in such small print. I also think that the order confirmation form

should have contained an express statement to the effect that it was exclusive of all conditions

and warranties.46

The plaintiff in this case, thus, was held to be bound by the exclusion clause as she had signed

the document which contained the exclusion clause in the absence of proved fraud or

misrepresentation.

The plaintiff in Curtis v. Chemical Cleaning and Dyeing Co.47 took a white satin wedding

dress to the defendant's shop to be cleaned. The shop assistant in the defendant's shop handed

the plaintiff a piece of paper headed 'receipt' which the plaintiff was asked to sign. When the

plaintiff asked why her signature was required, the plaintiff stated that she was informed that

defendant would not accept certain specified risks including the risk of damage by or to the

beads and sequins on the trimming of the dress. The plaintiff then signed the receipt.

The plaintiff sued the defendant for negligence when the dress, once returned to the plaintiff,

had a stain on it. The defendant relied on the exclusion clause in the receipt to deny liability

which stated:

This or these articles is accepted on condition that the company is not liable for any damage howsoever arising,

or delay.48

The plaintiff alleged that the exclusion clause was not valid as although the plaintiff had

signed the document which contained the exclusion clause, the signature was induced by a

misrepresentation.

Somervell LJ in this case held:

What was conveyed to the plaintiff, in my view, was that there were certain risks, in this case beads and sequins,

which the defendants were not prepared to accept. She was asked to sign this document and she thought that its

purpose was to exempt them from liability for beads and sequins, and that alone. That, I think, plainly is a

misrepresentation. The words on the document purported to exempt them from all liability, howsoever arising. In

those circumstances, I think, owing to that misrepresentation, this exception never became part of the contract

between the parties.49

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Denning LJ in this case explained:

This case is of importance because of the many cases nowadays when people sign printed forms without reading

them, only to find afterwards that they contain stringent clauses exempting the other side from their common-law

liabilities. In every such case it must be remembered that, if a person wishes to exempt himself from a liability

which the common law imposes on him, he can only do it by an express stipulation brought home to the party

affected, and assented to by him as part of the contract: Olley v. Marlborough Court.50If the party affected signs

a written document, knowing it to be a contract which governs the relations between them, his signature is

irrefragable evidence of his assent to the whole contract, including the exempting clauses, unless the signature is

shown to be obtained by fraud or misrepresentation: L'Estrange v. Graucob.51 But what is a sufficient

misrepresentation for this purpose?

In my opinion any behaviour, by words or conduct, is sufficient to be a misrepresentation if it

is such as to mislead the other party about the existence or extent of the exemption. If it

conveys a false impression, that is enough. If the false impression is created knowingly, it is a

fraudulent misrepresentation; if it is created unwittingly, it is an innocent misrepresentation;

but either is sufficient to disentitle the creator of it to the benefit of the exemption. In Rex v.

Kylsant52 it was held that a representation might be literally true but practically false, not because of what it said, but because of what it left unsaid; in short, because of what it implied. This is as true of an innocent

misrepresentation as it is of a fraudulent misrepresentation. When one party puts forward a printed form for

signature, failure to draw attention to the existence or extent of the exemption clause may in some circumstances

convey the impression that there is no exemption at all, or at any rate not so wide an exemption as that which is

in fact contained in the document. The present case is a good illustration. by failing to draw the attention to the width of the exemption clause, the assistant created a false impression that the exemption only related to the

beads and sequins, and that it did not extend to the material of which the dress was made. It was done perfectly

innocently, but nevertheless a false impression was created. it was a sufficient misrepresentation to disentitle the cleaners from relying on the exemption, except in regard to beads and sequins.53

Denning LJ also explained54 that the defendant would have been in no better position if the

assistant did not say anything about the existence of the clause as then the receipt would have

been a voucher for the customer to keep and produce to collect the goods.

The defendant could also have not relied on the clause, according to Denning LJ,55 if the

plaintiff had merely signed the receipt and not asked what terms the receipt contained as the

assistant's silence would have created a false impression that the receipt contained no

conditions at all.

Counsel for the defendant argued that even if there was innocent misrepresentation, the effect

of this was to give the plaintiff a right to rescind the contract and not a right in damages. The

plaintiff could not very well rescind the contract and still rely on the contract as a basis to sue

the defendant. Additionally, the contract could not be rescinded as it had already been

executed.

Denning LJ responded that56:

(i) an executed contract could be rescinded in a 'proper case', and

(ii) even if this contract was rescinded, the plaintiff could still sue the defendant for negligence

as once the defendant undertook the task of cleaning the dress, the defendant was under an

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obligation to do so with reasonable care.

Denning LJ concluded that:

In my opinion when the signature to a condition, purporting to exempt a person from his common-law liabilities,

is obtained by an innocent misrepresentation, the party who has made that misrepresentation is disentitled to rely

on the exemption. Whether you call that a rule of law or equity does not matter in these days. We have got too far

beyond 1873 to trouble about distinctions of that kind.57

The Court of Appeal unanimously58 held that the signature in this case was induced by a

misrepresentation and as such, the exclusion clause in the receipt did not absolve the

defendant from liability in negligence although the plaintiff signed the receipt.

The High Court in Tac Construction & Trading v. Bennes Engineering Bhd.59 considered the

effect of a signature of the project manager of the defendant on the progress and final claims

of the plaintiff. The court held that:

those signatures would bind the defendant even if they did not read those documents in question.60

The authorities cited61 by the court for this principle of law were L'estrange v. F. Graucob,

Limited62 and Curtis v. Chemical Cleaning and Dyeing Co.63 Although this Malaysian case did

not involve an exclusion clause, Abdul Malik Ishak J, in this case, did make some general

comments regarding signatures:

I must say something about signatures generally. The case of Geary v. Physic [1826] 5 B. & C. 234 establishes

beyond doubt that even a signature by pencil is sufficient. The signature appearing on a telegraph form can even

be considered to be sufficient and this found favour in at least three old vintage cases. Firstly, Godwin v. Francis

[1870] LR 5 CP 295. Secondly, McBlain v. Cross [1872] 25 LT 804. Thirdly, R. v. Riley [1896] 1 QB 309, 313.

Then there is the principle that a signature by means of a mark is also considered as sufficient (Baker v. Dening

[1838] 8 A. & E. 94 (signature of a will), and Dyas v. Stafford [1881] 7 LR Ir. 590). Signatures by initials have

also been considered to be clearly sufficient (In the Goods of Blewitt [1879] 5 PD 116 (signature of will);

Phillimore v. Barry [1818] 1 Camp. 513; Chichester v. Cobb [1886] 14 LT 433; and Hill v. Hill [1947] Ch. 231,

240).64

Unsigned Documents

The party seeking to rely on the exclusion clause must be able to prove that the clause was

reasonably noticeable.

In Parker v. The South Eastern Railway Company;Gabell v. The South Eastern Railway

Company,65 the Court of Appeal considered whether a person who deposits articles in the

cloak-room of a railway company is bound by a condition on the back of the ticket that the

company would not be liable for losses of goods exceeding 10/.

Mellish LJ in this case explained:

In an ordinary case, where an action is brought on a written agreement which is signed by the defendant, the

agreement is proved by proving his signature, and, in the absence of fraud, it is wholly immaterial that he has not

read the agreement and does not know its contents. The parties may, however, reduce their agreement into

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writing, so that the writing constitutes the sole evidence if the agreement, without signing it; but in that case there

must be evidence of the agreement, without signing it; but in that case there must be evidence independently of

the agreement itself to prove that the defendant has assented to it. In that case, also, if it is proved that the

defendant has assented to the writing constituting the agreement between the parties, it is, in the absence of fraud,

immaterial that the defendant had not read the agreement and did not know its contents. Now if in the course of

making a contract one party delivers to another a paper containing writing, and the party receiving the paper

knows that the paper contains conditions which the party delivering it intends to constitute the contract, I have no

doubt the party receiving the paper does, by receiving and keeping it, assent to the conditions contained in it,

although he does not read them, and does not know what they are.66

Ordinarily, thus, the position seems to be:

(i) a written agreement that is signed the party who signed the document is deemed to know its contents, whether he read it or not unless this party can prove that his consent was vitiated

by fraud,

(ii) a written agreement that is not signed the party seeking to rely on the terms of the agreement must prove that the other party agreed to it independently of the agreement itself.

Then, the position is as above, namely, that the parties are deemed to know the terms of the

agreement, whether they read it or not unless there was some fraud, and

(iii) in the course of making a contract, one party delivers to the other a paper containing

writing and the recipient knows that paper contains conditions that the party delivering the

paper intends to constitute the contract by receiving and keeping the paper, the recipient is deemed to have assented to the conditions contained therein, whether he has read them and

knows what the conditions are or not.

The present case, according to Mellish LJ, poses the problem of whether a person who

receives a ticket, knowing that there is writing on the back of it, is bound by those terms even

though the party did not read the terms and did not know that the writing were conditions of a

contract.

This situation is different from the third situation above as in the third situation above, the

recipient knows that the writing on the paper are conditions. However, in the facts of the case,

the recipient only knew that there was writing on the back of the ticket but did not know that

they were conditions. Therefore, the mere fact that the recipient accepted the ticket and kept it

may not be a sufficient reason to presume that the party assented to those conditions, whether

he read them or not.

Mellish LJ continued:

Now the question we have to consider is whether the railway company were entitled to assume that a person

depositing luggage, and receiving a ticket in such a way that he could see that some writing was printed on it,

would understand that the writing contained the conditions of contract, and this seems to me to depend upon

whether the people in general would in fact, and naturally, draw that inference. The railway company, as it seems

to me, must be entitled to make some assumptions respecting the person who deposits luggage with them: I think

they are entitled to assume that he can read, and that he understands the English language, and that he pays such

attention to what he is about as may be reasonably expected from a person in such a transaction as that of

depositing luggage in a cloak-room. The railway company must, however, take mankind as they find them, and if

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what they do is sufficient to inform people in general that the ticket contained conditions, I think that a particular

plaintiff ought not to be in a better position than other persons on account of his exceptional ignorance or

stupidity or carelessness. But if what the railway company do is not sufficient to convey to the minds of people in

general that the ticket contains conditions, then they have received the goods on deposit without obtaining the

consent of the persons depositing them to the conditions limiting their liability. I am of the opinion, therefore,

that the proper direction to leave to the jury in these cases is, that if the person receiving the ticket did not see or

know that there was any writing on the ticket, he is not bound by the conditions; that if he knew there was

writing, and knew or believed that the writing contained conditions, then he is bound by the conditions; that if he

knew there was writing on the back of the ticket, but did not know or believe that the writing contained

conditions, nevertheless he would be bound, if the delivering of the ticket to him in such a manner that he could

see there was writing upon it, was, in the opinion of the jury, reasonable notice that the writing contained

conditions.67

the real question, namely, whether the railway company did what was reasonably sufficient to give the plaintiff notice of the condition.68

The test, thus, seems to be that if the person receiving the ticket:

(i) did not see or know that there was any writing on the ticket then he is not bound by the conditions,

(ii) knew there was writing on the ticket and knew or believed that the writing contained

conditions then he is bound by the conditions, and

(iii) knew that there was writing on the ticket but did not know or believe that the writing

contained conditions (as in the present case):

(a) if the delivery of the ticket in such a manner that he could see there was writing on the

ticket was reasonable notice that the writing contained conditions then he is bound by the conditions, or

(b) if the delivery of the ticket in such a manner that he could see there was writing on the

ticket was not reasonable notice that the writing contained conditions then he is not bound by the conditions.

The question in this case appears to be whether a person who deposits luggage in a cloak-

room of a railway station should reasonably assume that the writing on the back of the ticket

contains conditions. If this is a reasonable assumption based on the circumstances of the

transaction, then the person would be bound by the conditions stated on the ticket, whether the

person read the conditions or not.

Unfortunately, the court in this case, did not conclude on the facts of this case as to whether it

was a reasonable assumption to make or not. Mellish LJ merely concluded that there was a

misdirection of the jury and ordered a new trial.

Baggallay LJ seemed to lean in favour of concluding it was not reasonable to assume that the

tickets contained conditions:

13

The primary purpose of the ticket is to identify the articles deposited and the party entitled to reclaim them, but

practically, and by reason of the recognised practice of not delivering the ticket until the prescribed charge has

been paid; it becomes a voucher for the payment.69

Baggallay LJ also explained:

Now as regards each of the plaintiffs, if at the time when he accepted the ticket, he, either by actual examination

of it, or by reason of previous experience, or from any other cause, was aware of the terms of purport of effect of

the endorsed conditions, it can hardly be doubted that he became bound by them. I think also that he would be

equally bound if he was aware or had good reason to believe that there were upon the ticket statements intended

to affect the rights of himself and the company, but intentionally or negligently abstained from ascertaining

whether there were any such, or from making himself acquainted with their purport. But I do not think that in the

absence of any such knowledge or information, or good reason for belief, he was under any obligation to examine

the ticket with a view of ascertaining whether there were any such statements or conditions upon it.70

However, Baggallay LJ final order was for a new trial.

Bramwell LJ took a similar view of the case as Baggallay LJ in that Bramwell LJ also strongly

favoured the finding that there was no reasonable notice on the facts of the conditions on the

ticket. However, Bramwell LJ too, ordered a new trial.

Bramwell LJ stated:

The defendants put into the hands of the plaintiff a paper with printed matter on it, which in all good sense and

reason must be supposed to relate to the matter in hand. This printed matter the plaintiff sees, and must either

read it and not object, or does not read it, he must be held to consent to its terms 71

The plaintiff in Richardson, Spence & Co.and the "Lord Gough" Steamship Company, Limited

v. Minnie Rowntree72 was a passenger on board a steamer owned by the defendant. The

defendants attempted to rely on conditions stated on the ticket.

On the ticket it was stated that:

It is mutually agreed for the consideration aforesaid that this ticket is issued and accepted upon the following

conditions.

Condition (d) was that:

The company is not under any circumstances liable to an amount exceeding $100 for loss of injury to the

passenger or his luggage.

The House of Lords in this case unanimously73 dismissed the appeal. The decisions of the

jury74 was confirmed that:

(i) the plaintiff knew there was writing or printing on the ticket,

(ii) the plaintiff did not know that the writing or printing on the ticket contained conditions

relating to the terms of the contract of carriage, and

14

(iii) the defendants did not do what was reasonably sufficient to give the plaintiff notice of the

conditions.

Lord Herschell LC stated:

the plaintiff paid the money for her passage for the voyage in question, and that she received this ticket handed to her folded up by the ticket clerk, so that no writing was visible unless she opened and read it. There are

no facts beyond those. Nothing was said to draw her attention to the fact that this ticket contained any conditions

75

Lord Ashbourne noted:

The ticket in question in this case was for a steerage passenger a class of people of the humblest description, many of whom have little education and some of them none. I think, having regard to the facts here, the

smallness of the type in which the alleged conditions were printed, the absence of any calling of attention to the

alleged conditions, and the stamping of red ink across them 76

The House of Lords in this case, in coming to the conclusion that there was insufficient notice

drawn to the exclusion clause, relied on the facts that:

(i) the passengers were not well educated,

(ii) the print of the exclusion clause was small,

(iii) the exclusion clause was obscured by a stamp of red ink, and

(iv) the ticket was handed to the plaintiff folded.

The defendant in Hood v. Anchor Line (Henderson Brothers), Limited77 was a steamship

company which tried to rely on the conditions stated in the passenger's ticket. The plaintiff

sued the defendant for negligence of the defendant's employees.

The ticket was picked up on behalf of the plaintiff by Mr. Paul May who was the plaintiff's

clerk. Mr. May and the plaintiff did not read the ticket. The ticket was enclosed in an

envelope. On the top of the face of the envelope, there was a hand pointing to the statement

printed in capital letters, "Please read conditions of the enclosed contract".

Viscount Haldane in the House of Lords commented:

No doubt the burden of proof lies on the respondents to show that they did all that was reasonably required in

order to bring this condition to the notice of Mr. May, who represented the appellant in the transaction. It is true that Mr. May did not look at the envelope closely or refer to the condition. He took the contract away and put

it in a safe, and ultimately gave it to the appellant, who did not read it either. But I am of the opinion that the real

question was not whether they did read it, but whether they can be heard to say that they did not read it. If it had

been merely a case of inviting people to put a penny into an automatic machine and get a ticket for a brief

journey, I might think differently. In such a transaction men cannot naturally be expected to pause to look

whether they are obtaining all the rights which the law gives them in the absence of a special stipulation. But

when it is a case of taking a ticket for a voyage of some days, with arrangements to be made, among other things,

as to cabins and luggage, I think ordinary people do look to see what bargain they are getting, and should be

15

taken as bound to have done so and as precluded from saying that they did not know.

The question is not whether the appellant actually knew of the condition. I have no doubt that

he did not. The real question is whether he deliberately took the risk of there being conditions

in the face of a warning sufficiently conveyed that some conditions were made and would

bind him. If he had signed the contract, he certainly could not have been heard to say that he

was not bound to look. The common sense of mankind which the law expresses here would

not permit him to maintain such a position. And when he accepted a document that told him

on its face that it contained conditions on which alone he would be permitted to make a long

journey across the Atlantic on board the steamer, and then proceeded on that journey, I think

he must be treated according to the standards of ordinary life applicable to those who make

arrangements under analogous circumstances and be held as bound by the document as clearly

as if he had signed it.78

Viscount Haldane in this case appears to emphasise the principle that when the court considers

whether the defendant has done all that is reasonably required to give the plaintiff notice of

any exclusion clause, this is an objective question. Whether the plaintiff himself was aware of

the existence and effect of the clause is not material. What is material is whether a reasonable

person would be aware of such a clause. The plaintiff is not allowed to turn a 'blind eye' where

a reasonable person would take the trouble to make enquiries. The plaintiff cannot be

protected by his own careless ignorance.

Another point which may be gathered from this case although it was not specifically

mentioned in this case is that on the facts of the case, the exclusion clause in question was to

the effect " the respondents were not liable in any case of injury to the passenger beyond the amount of 10/."79 This would seem to be quite a restrictive clause, yet it was held by a

unanimous80 decision of the House of Lords to be valid. Even a wide exclusion clause then

can be valid as long as reasonable notice of it is given.

The court in Thompson v. London, Midland and Scottish Railway Company,81 had to consider

the effect of exclusion clauses printed on a railway ticket. On the ticket issued to the plaintiff

there was a statement that, "Excursion, For conditions see back." On the back of the ticket, it

is stated, "Issued subject to the conditions and regulations of the company's time tables and

notices and excursion and other bills. Return as per bill."

The plaintiff in this case could not read. However, as Lord Hanworth MR stated:

The plaintiff in this case cannot read; but having regard to the authorities, and the condition of education in this

country, I do not think that avails her in any degree.82

The ticket was priced at a lower figure than ordinary. As Lord Hanworth MR stated:

Obviously persons who are minded to go for a day journey of this sort do not take the trouble to make an

examination of all the conditions, but two things are plain, first, that any person who takes this ticket is conscious

that there are some conditions on which it is issued and also, secondly, that is it priced at a figure far below the

ordinary price charged by the railway company, and from that it is a mere sequence of thought that one does not

16

get from the railway company the ticket which they do provide at the higher figure83

The railway company is to be treated as having made an offer to intending travellers that if

they will accept the conditions on which the railway company make the offer they can be

taken at suitable times, on suitable days and by indicated trains from Darwen to Manchester

and back at a price largely reduced from the common price; but upon certain conditions which

can be ascertained, and of the existence of which there are no doubt, for they are indicated

clearly upon the ticket which is issued.84

Additionally, as Lawrence LJ stated:

In these circumstances (the notice on the ticket not being tricky or illusory) it seems to me that there is no room

for any evidence that the company had not done all that was reasonably necessary as a matter of ordinary practice

to call attention to the conditions upon which the ticket was issued.85

Here it cannot be said that the condition in question in this case is an unreasonable one, either

from the point of view of the company or from that of the passenger. It is a condition which has existed in respect of excursion trains for upwards of half a century, and is, to my mind, a

reasonable condition, which need not have special attention directed to it.86

The court held that the railway company did take sufficiently reasonable steps to bring the

conditions to the notice of its customers. The reasons for this seem to be:

(i) the conditions printed legibly and clearly on the ticket, and

(ii) the conditions were reasonable and typical in this kind of excursion.

The defendant in J. Spurling Ltd v. Bradshaw87 bought eight wooden casks of orange juice and

sent them to the plaintiffs who were warehousemen. The plaintiffs, in turn, sent the defendant

a receipt for the goods.

The front of the receipt contained a statement that the company's conditions were printed on

the back of the receipt. There were a number of conditions printed on the back of the receipt.

The plaintiffs later sent the defendant an invoice stating that the goods were handled subject to

the conditions.

The defendant did not fully pay the warehousing cost to the plaintiffs. Nevertheless, the

plaintiffs released the defendant's goods to a third party as requested by the defendant in a

delivery order issued to the plaintiffs.

Only when the plaintiffs sued the defendant for arrears in payment did the defendant inform

the plaintiffs of a counterclaim for damages in respect of the storage of the barrels. This was

eight months after the foods were collected. The plaintiffs attempted to rely on the exclusion

clauses to exempt themselves from liability for the counterclaim.

Denning LJ in the Court of Appeal held:

17

I agree that the more unreasonable a clause is, the greater the notice which must be given to it. Some clauses

which I have seen would need to be printed in red ink on the face of the document with a red hand pointing to it

before the notice could be held to be sufficient. The clause in this case, however, in my judgment, does not call

for such exceptional treatment, especially when it is construed, as it should be, subject to the proviso that it only

applies when the warehouseman is carrying out his contract and not when he is deviating from it or breaking it in

a radical respect. So construed, the judge was, I think, entitled to find that sufficient notice was given.88

In Burnett v. Westminster Bank Ltd,89 a bank tried to rely on statements printed on the front

cover of a cheque book which they alleged, gave the customer notice that cheques in that book

could only be drawn from the customer's account at the Borough Branch of the bank. The

customer had drawn a cheque which the customer altered to indicate that the cheque was to be

drawn from his account at the Bromley branch of the bank.

The customer later called the Bromley branch of the bank and instructed them to stop payment

on the cheque. The cheque was debited in the Borough branch of the bank. The customer

alleged that the bank had acted without his authority.

This notice had not appeared on previous cheque books of the customer. This new cheque

book was designed to use magnetised ink which a central computer could read. The customer

admitted that he had seen that the front cover of the cheque book contained printed words but

denied that he had read them.

Mocatta J in the High Court held:

I am unable to treat the two sentences on the cheque book cover as adequate notice. Whilst it is true that the new cheque book differed materially from previous ones in format, the differences were not very marked.

Cheque book covers had never previously been used for the purpose of containing contractual terms and I think

that they fell into the category of documents which the recipients could reasonably assume contained no

conditions: see, for example, per Mellish LJ, in Parker v. South Eastern Ry. Co.90 and Chapelton v. Barry Urban

District Council.91 The position might have been different had the new cheque book been the first issued to the

plaintiff on his opening the account. But in the case of a customer like the plaintiff who has had an account for

some time under the system prevailing down to the issue of the new cheque book, I am of the opinion that the

mere presence of the two sentences on the new cheque book cover is inadequate to affect the pre-existing

contractual relationship. In such circumstances I do not consider that the defendants92could establish that they

had given adequate notice to their customer to bind him to the new restricted use of the cheques unless they could

show that he had read the sentences in question, or had signed some document indicating his agreement to their

effect. I would be prepared to accept as the equivalent of the latter the signature of the customer on a cheque

provided that the cheque itself bore the words limiting its use to the bank, branch and account shown in print on

it. The present cheque bore no such words.93

Mocatta J in this case seemed to emphasise that there was no reasonable notice of the

exclusion clause as:

(i) the plaintiff did not sign on the page the exclusion clause was printed,

(ii) exclusion clauses are normally not printed on cheque book covers, and

(iii) the plaintiff did not have previous notice of this clause from prior dealings with the

18

defendant.

The plaintiffs in the case of Intrefoto Picture Library Ltd v. Stiletto Visual Programmes Ltd94

run a library of photographic transparencies. The defendants are an advertising agency. A

director of the defendants telephoned the plaintiffs and asked the plaintiffs whether they had

photographs of the 1950s which the defendants intended to use in a presentation to a client.

Fourty seven transparencies were delivered to the office of the defendants later that same day

along with a delivery note.

The delivery note bore a notice stated as condition number 2 that the transparencies must be

returned within 14 days from the date of delivery, otherwise a daily holding fee will be

charged for each transparency which is retained longer than the specified period.

Another condition on the delivery note stated that these conditions are understood to have

been accepted unless the package is returned to the plaintiffs immediately. These conditions

were also stated to apply to all the transparencies delivered, whether or not the defendants

completed a request form.

The defendants did not use the photographs in the presentation but did not return the

transparencies to the plaintiff until almost a month later. The plaintiff sent an invoice to the

defendants demanding a holding charge for the transparencies which the defendants refused to

pay.

The High Court awarded the plaintiffs the holding charge stated in the invoice. The following

is the judgment of the Court of Appeal.

Dillon LJ explained:

At the time of the ticket cases in the last century it was notorious that people hardly ever troubled to read printed

conditions on a ticket or delivery note or similar document. That remains the case now. In the intervening years

the printed conditions have tended to become more and more complicated and more and more one-sided in

favour of the party who is imposing them, but the other parties, if they notice that there are printed conditions at

all, generally still tend to assume that such conditions are only concerned with ancillary matters of form and are

not of importance. In the ticket cases the courts held that the common law required that reasonable steps be taken

to draw the other parties' attention to the printed conditions or they would not be part of the contract. It is in my

judgment a logical development of the common law into modern conditions that it should be held, as it was in

Thornton v. Shoe Lane Parking Ltd, that, if one condition in a set of printed conditions is particularly onerous or

unusual, the party seeking to enforce it must show that that particular condition was fairly brought to the attention

of the other party.

In the present case, nothing whatever was done by the plaintiffs to draw the defendants'

attention particularly to condition 2; it was merely one of four columns' width of conditions

printed across the foot of the delivery note. Consequently condition 2 never, in my judgment,

became part of the contract between the parties.95

Dillon LJ highlighted an interesting point that the more onerous the exclusion clause, the

more it should be brought to notice. This approach was also mentioned by Megaw LJ in the

Court of Appeal in Thornton v. Shoe Lane Parking Ltd96 where the term used instead of

19

'onerous' was 'restrictive':

But at least where the particular condition relied on involves a sort of restriction that is not shown to be usual in

that class of contract, a defendant must show that his intention to attach an unusual condition of that particular

nature was fairly brought to the notice of the other party.97

Bingham LJ in this case similarly held that the plaintiffs had not sufficiently brought the

exclusion clause to the notice of the defendants and thus was not entitled to the holding

charges.

The plaintiff in Geier (Formerly Braun) v. Kujawa, Weston (Third Party) and Warne Bros.

(Transport) Ltd. (Third Party),98 while in a car driven by the defendant, was involved in an

accident and sustained injuries. The accident was a collision between the car driven by the

defendant and a 20-ton lorry and loader driven by Mr. Weston. This action is between the

plaintiff and defendant.

The plaintiff alleges the defendant was negligent. The defendant stated that he brought to the

plaintiff's attention a notice situated over the glove compartment on the passenger's side of the

defendant's car which read "Warning. Passengers ride at their own risk and on the condition

that no claim shall be made against the driver or owner in the event of loss or injury."99

There were other issues in this case such as the plaintiff's contributory negligence in not

wearing a safety belt and the defence of volenti non fit injuria. Brabin J in the High Court in

stated with regard to the exclusion clause:

At this time it was not very rewarding to speak to the plaintiff in English because she had very little English at

her command. She could understand a little and spoke less.

I am quite satisfied that the plaintiff did not see and did not read this notice. I would have

thought that since the defendant was speaking German to the plaintiff, because she could not

speak English, that if he wished to call her attention to a notice that was in his motor car he

would have translated it into German so that she could understand that which she was

supposed to see.100

Thus, the language of an exclusion clause is important in that if the defendant is aware that

the plaintiff is unlikely to understand the language the exclusion clause is stated in, the

defendant should take the pains to explain it to the plaintiff if the defendant is seeking to rely

on the exclusion clause to negate liability.

The court in Malaysian Airline System Bhd. v. Malini Nathan & Anor.101 considered the effect

of conditions printed in an airline ticket purchased for the first plaintiff's travel from London

to Malaysia. When the first plaintiff went to check in at Heathrow Airport, she was told that

there was no seat for her on the flight she was booked on. She left on another flight the next

day.

Condition 9 under 'Conditions of Contract' printed on p. 2 of the ticket provided:

20

Carrier undertakes to use its best efforts to carry the passenger and baggage with reasonable dispatch. Times

shown in timetables or elsewhere are not guaranteed and form no part of this contract. Carrier my without notice

substitute alternate carriers or aircrafts, and may alter or omit stopping places shown in the ticket in case of

necessity. Schedules are subject to change without notice. Carrier assumes no responsibility for making

connections.102

Wan Hamzah SCJ held:

In my judgment the defendant's decision not to carry the first plaintiff on flight No. MH 893 on March 26, was

fully covered by condition No. 9. What the defendant did or omitted to do was in accordance with condition No.

9, and therefore there was no breach of contract on the part of the defendant. The plaintiffs103 ought to have

known condition No. 9 and they were presumed to have known it as it was printed on the ticket. Even if it was

true that the defendant had confirmed or represented to the plaintiffs that the first plaintiff had a definite and

certain booking of a seat on that flight, it must be understood that such confirmation or representation was made

subject to condition No. 9. Because it was made subject to condition No. 9 it cannot be said that such

confirmation or representation was made falsely or recklessly.104

The court also found that condition number 9 absolved the defendant from liability for105:

(i) not finding the name of 'Nathan Malini' in the computer when the first plaintiff gave her

name as 'Malini Nathan' at the checking-in counter,

(ii) not allowing the first plaintiff on the flight for which she had a confirmed seat,

(iii) delay as art. 19 of the Warsaw Convention as amended at the Hague in 1955 which was

made applicable to Malaysia from 19 December 1974 though the Carriage by Air Act 1974106

makes carriers liable for delay. However, the court stated that this Article only applied where

the time of carriage is fixed which in this case, it was not due to condition number 9.

Additionally, art. 19 is also subject to art. 3(2) of this Convention states that the ticket shall

constitute prima facie evidence of the conditions107 of the contract of carriage.

The court did not refer to any case as authority for the principles stated. However, perhaps an

airline ticket is a document which a passenger should read and as such, conditions printed on

an airline ticket is reasonably sufficient notice of the exclusion clauses.

Viscount Haldane in the House of Lords in Hood v. Anchor Line (Henderson Brothers),

Limited108 noted:

My Lords, the question on this appeal is of the nature of those in which the boundary line between law and fact is

not of an abstract or definite character. There is a large and varied class of cases where the legal duty of a

member of society to his neighbour cannot be laid down a priority or without examining the special

circumstances of the situation. The duty in these instances is ascertained by a standard which depends, not on

mere general principles fashioned by the jurist, for no such general principles can provide for all the concrete

details of which account must be taken, but on the opinion of reasonable men who have considered the whole of

the circumstances in the particular instance and can be relied on to say how, according to accepted standards of

conduct, a reasonable man ought to behave in these circumstances towards his neighbour towards whom he is

bound by the necessities of the community to act with forbearance and consideration. When the law takes

cognisance of duties imposed by such social standards it usually refers questions relating to them to a tribunal

which is one of fact rather than of abstract legal principle.109

21

Thus, it seems that whichever party is seeking to rely on an exclusion clause bears the burden

of proof that the other party had reasonably sufficient notice of it. This is a question of fact. It

is also an objective question. It does not matter whether the particular plaintiff read the clause

or not. What matters is whether a reasonable person would have taken the pains to inform

himself of the purport of the clause.

The plaintiff in Associated Concrete Products (M) Sdn. Bhd. v. Tackoh Sdn. Bhd.,110 who is a

manufacturer and supplier of reinforced concrete pipes agreed to supply such pipes to the

defendant.

The pipes were delivered broken and cracked, with various other defects. The plaintiff was

aware that the pipes were to be used for a very specific purpose and the pipes supplied by the

plaintiff did not meet the specifications. The plaintiff sought to disclaim liability based on two

clauses printed on the back of the plaintiff's sale orders (AB18 and AB19) which state111:

(i) clause 7(d) the defendant must lodge a written complaint of the defective pipes within 90 days from the date the pipes were despatched from where the pipes were manufactured, and

(ii) clause 9 the plaintiff is exempted from any warranty, guarantee or condition other than those stated in the contract.

These sales orders had a blank space for the defendant's signature. The defendant did not sign

the documents. One of the sales orders (AB1) also stated that the defendant's order for the

pipes and the plaintiff's acceptance would be formalised by a sale and purchase agreement

which was not done.

Siti Norma Yaakob J in the High Court held that:

Since the defendant had not signed on AB18 and 19, the plaintiff cannot hold the defendant to be bound by the

printed terms and conditions as such terms and conditions do not form part of the agreement under AB1. Additionally as far as the exemption clause goes, I consider it to be very unjust and inequitable that the plaintiff

when undertaking to manufacture PVC pipes in accordance with specific instructions, should in the very same

document, too, set out terms and conditions exempting itself from all warranties, conditions and guarantees. I

find that the printed conditions exempting the plaintiff from liability are totally repugnant to the spirit and intent

of the agreement.112

The court seems to be referring closely to the intentions of the parties in the transaction:

(i) the defendant was meant to sign the sales order, which the defendant did not do as such, the defendant did not seem to be bound by the printed exemption clauses therein, and

(ii) the exemption clause in this case stated that the plaintiff would only be bound by the terms

stated in a contract (which was intended to be formalised according to the sales order) but

again, this was not done as such, since there is no contract and especially since the plaintiff was under specific instructions with regard to this order, it was not the original intention of the

parties for the plaintiff to be bound by no conditions at all. The plaintiff is not permitted to use

the omission of entering into a formal contract with the defendant as an excuse for denying all

22

his contractual obligations.

The plaintiff in Sanggaralingam Arumugam v. Wong Kook Wah & Anor.113 drove his car to an

automatic car park owned by the defendant. As the plaintiff drove in, a ticket was pushed out

from a machine. The plaintiff saw that the ticket contained but did not read it save to see the

time printed on the ticket. It was stated on the ticket that the ticket was issued subject to the

conditions displayed in the premises. The plaintiff would have to walk around in the garage to

read the conditions displayed.

The conditions were lengthy and included the statement that the defendant was not liable for

any damage to the cars or any injury to the customers, however caused, while the car was in

the car park. The plaintiff was severely injured when he came to collect his car.

Ajaib Singh J in this case held:

The defendants were not able to avoid liability by relying on the exempting condition because, in order to show

that the plaintiff was bound by the condition, it was necessary to show either that he knew of it or that the

defendants had done what was reasonably necessary to draw it to his attention; for this purpose, where the

condition was exceptionally wide and destructive of the plaintiff's rights or was one which was not shown to be

usual in that class of contract, it was not sufficient to show that the plaintiff had been given notice that the ticket

was issued subject to conditions; it must be shown that adequate steps had been taken to draw his attention in the

most explicit way to the particular exempting condition relied on; in the present case the defendants had failed to

show that the plaintiff knew of the condition or that they had taken sufficient steps to draw his attention to it.114

The High Court in this case, thus, emphasised that the more wide an exclusion clause and

unusual to the type of contract, the more care the defendant must take to bring the clauses to

the notice of the plaintiff.

Non-Contractual Documents

Mellish LJ in Parker v. The South Eastern Railway Company; Gabell v. The South Eastern

Railway Company115 also highlighted the nature of the document as affecting whether a person

is likely to peruse it intently or not:

Now I am of the opinion that we cannot lay down, as a matter of law, either that the plaintiff was bound or that he

was not bound by the conditions printed on the ticket, but did not know that the writing contained conditions. I

think that there may be cases in which a paper containing writing is delivered by one party to another in the

course of a business transaction, where it would be quite reasonable that the party receiving it should assume that

the writing contained in it no condition, and should put it in his pocket unread. For instance, if a person driving

through a turnpike-gate received a ticket upon paying the toll, he might reasonably assume that the object of the

ticket was that by producing it he might be free from paying toll at some other turnpike-gate, and might put it in

his pocket unread. On the other hand, if a person who ships goods to be carried on a voyage by sea receives a bill

of lading signed by the master, he would plainly be bound by it, although afterwards in an action against the

shipowner for the loss of goods, he might swear that he had never read the bill of lading, and that he did not

know that it contained the terms of the contract of carriage, and that the shipowner was protected by the

exceptions contained in it. Now the reason why the person receiving the bill of lading would be bound seems to

me to be that in the great majority of cases persons shipping goods do know that the bill of lading contains the

terms of the contract of carriage; and the shipowner, or the master delivering the bill of lading, is entitled to

assume that the person shipping goods has that knowledge. It is, however, quite possible to suppose that a person

who is neither a man of business nor a lawyer might on some particular occasion ship goods without the least

23

knowledge of what a bill of lading was, but in my opinion such a person must bear the consequences of his own

exceptional ignorance, it being plainly impossible that business could be carried on if every person who delivers

a bill of lading had to stop to explain what a bill of lading was.116

Apart from illustrating the importance of the nature of documents in the court's deliberation of

whether a reasonable person would read the document, Mellish LJ has also clarified that the

court considers what a reasonable person in the transaction would know and do. An argument

that a carrier was inexperienced in his trade and does not know the nature of a bill of lading,

according to Mellish LJ, would not succeed.

In Chapleton v. Barry Urban District Council,117 the plaintiff, Mr. David Chapleton, went to

the beach and hired two deck chairs, for him and his friend, belonging to the defendants. On

the side of the deck chairs which were piled on the beach was a notice that members of the

public who wished to use the deck chairs were requested to obtain tickets for the chairs from

chair attendants which the plaintiff did. The notice also stated that the tickets must be retained

for inspection.

The plaintiff glanced at the tickets and placed them in his pocket. He stated in the court that he

did not know there were any conditions on the tickets. He put the deck chairs up on the beach

in the ordinary way but when he sat down on them, he went through the canvass.

On the ticket it was stated:

The Council will not be liable for any accident or damage arising from hire of chair.

The Court of Appeal in this case unanimously118 held that the council was liable for the injury

the plaintiff suffered.

MacKinnon LJ explained:

if a man does an act which constitutes the making of a contract, such as taking a railway ticket, or depositing his

bag in a cloak-room, he will be bound by the terms of the document handed to him by the servant of the carriers

or bailees; but if he merely pays the money for something and receives a receipt for it, or does something which

clearly amounts to that, he cannot be deemed to have entered into a contract in the terms of the words that the

creditor has chosen to print on the back of the receipt, unless, of course, the creditor has taken reasonable steps to

bring the terms of the proposed contract to the mind of the man.119

MacKinnon LJ agreed with the learned county court judge in this case that the defendant had

not taken such reasonable steps to draw the plaintiff's attention to the conditions on the ticket

as being part of the contract.

Goddard LJ in this case stated:

In this case the appellant paid 2d. in order to have the right to sit on a chair on the beach, and he was asked to

take a ticket in the form of a receipt for that purpose, and was given a document which shows nothing on the face

of it, except that the man had the right to sit in the chair until 7.30pm120 on the day when the accident occurred

and the fact that the ticket was not transferable. I cannot imagine that anybody paying 2d. under those

circumstances for the privilege of sitting in a chair on the beach would think for one moment that some

conditions were being imposed upon him which would limit his ordinary rights, or that the document he received

24

when paying his 2d. was a contractual document in any shape or form. I think the ticket he received was nothing

but a receipt for his 2d. a receipt which showed him how long he might use the chair.121

One must have regard to the facts of the case and the general circumstances of the case.122

The court seems to emphasise the nature of the transaction and document on which the

exclusion clause was stated was not such that a client would pay particular attention. The

plaintiff was entitled to assume that the ticket was a receipt for payment and as such, unlikely

to contain important terms of the contract.

In Low Kon Fatt v. Port Klang Golf Resort (M) Sdn. Bhd.,123 the plaintiff read an

advertisement in the newspapers regarding the 'Port Klang Golf Resort'. The defendant was

the licence-holder of a golf course at the resort. The plaintiff called at the defendant's office

and was handed pamphlets and a brochure about the resort. The plaintiff became a member in

the resort.

The brochure stated that the resort would have facilities such as a marina, floating seafood

restaurant, floating chalets and facilities for sea-sports. These were not built.

With regard to the contractual effect of the statements in the brochure, Kamalanathan Ratnam

J in the High Court held:

Where the defendant has made a false representation to the plaintiff which had the object and result of inducing

the plaintiff to enter into the licence agreement the plaintiff may in my judgment elect to regard the contract as rescinded. Whilst I accept the fact that a representation must be distinguished from a mere statement, yet where a

statement is presented in such a way as to represent a fact which would induce a representee to enter into a

contract then it is my duty to hold that such a statement was intended to have contractual force and is thus a

contractual term.

Although the statements made in the brochure are now said to be intended for the future, yet it

is clear that such a statement of intention involves a representation as to the existence of the

intention which is itself a present fact.

At times mere exaggeration cannot be held as [a] representation. A mere puffing and gloating

of one's own goods and of its high esteem ought to be taken with the proverbial 'pinch of salt'.

However, where the puffing or exaggeration has both the object and the result of inducing the

representee to enter into the contract, the puffing or exaggeration must then form a

representation.124

The defendant did not even ascertain from the Port Kelang Authority that prior approval is

required for the construction of sea-sport facilities and as such, the building of these facilities

could not have commenced as the brochure promised until this approval had been obtained.

The court held that the defendant had negligently prepared the brochure and was under a duty

to make such enquiries. This was a misrepresentation under ss. 18(a) and 18(b) of the

Contracts Act 1950.

25

On the last page of the brochure, it is stated:

IMPORTANT NOTE

The contents and information contained herein do not constitute or shall be deemed to

constitute any warranty or representation of whatsoever nature, whether expressed or implied,

on the part of Port Klang Golf Resort Management Sdn Bhd and/or its associates and are

subject to changes without notice at the absolute discretion of Port Klang Golf Resort

Management Sdn Bhd from time to time.125

The court held with regard to the exclusion clause that:

Since I have held that the terms contained in the brochure have contractual force, in effect therefore this is an

exclusion clause.126

An exclusion clause, thus, may be contained in a non-contractual document, especially if the

party whose document it is expect that the party who receives the document would place great

reliance on what was stated therein and this expectation was fulfilled to the extent that the

statements in the non-contractual document actually induced the contract.

Summary

Factors127 the court might consider in deciding whether reasonable notice of the clause was

given could include:

(i) the general characteristics of the clientele, for example:

(a) the clients in Richardson, Spence & Co. and the "Lord Gough" Steamship Company,

Limited v. Minnie Rowntree128 were stated to be not well educated,

(b) the client in Thompson v. London, Midland and Scottish Railway Company129 could not

read, but, this fact was not reflective of the majority of clients,

(c) it was stated in Parker v. The South Eastern Railway Company; Gabell v. The South

Eastern Railway Company130 that even if a particular carrier did not know the nature of a bill

of lading, carriers in general do and it is the general standard which would be considered by

the courts, and

(d) Mellish LJ in Parker v. The South Eastern Railway Company; Gabell v. The South Eastern

Railway Company131 stated the railway company is entitled to make certain presumptions of

the clients:

The railway company, as it seems to me, must be entitled to make some assumptions respecting the person who

deposits luggage with them: I think they are entitled to assume that he can read, and that he understands the

English language, and that he pays such attention to what he is about as may be reasonably expected from a

person in such a transaction as that of depositing luggage in a cloak-room;

26

(ii) the wider the coverage of the clause the more the steps may be required to bring such a

clause to the notice of the clients as was stated by Ajaib Singh J in Sanggaralingam

Arumugam v. Wong Kook Wah & Anor.132;

(iii) the size of the print of the clause, for example:

(a) in Alexander v. Railway Executive,133 Devlin J explained that although the print on the

ticket was small, it was largely and legibly printed on the ticket that there were conditions and

the same conditions were largely and legibly displayed on a notice in the waiting room and

parcels office, and

(b) this factor is often referred to as relevant but by itself may not be conclusive as for

example in L'estrange v. F. Graucob, Limited134 where although the print was small, the

clause was binding as the party against whom the clause operated had signed the document

wherein the clause appeared;

(iv) the location of the clause on the document it would attract more notice if the clause was in a prominent location;

(v) was the clause obstructed from view such as in Richardson, Spence & Co. and the "Lord

Gough" Steamship Company, Limited v. Minnie Rowntree where the part of the document

where the clause appeared was:

(a) folded,135 and

(b) covered by a stamp;136

(vi) the language of the clause being understandable to the general clientele:

(a) in Parker v. The South Eastern Railway Company; Gabell v. The South Eastern Railway

Company,137 Mellish LJ stated that the railway company is entitled to presume that their

clients understand English,

(b) in Geier (Formerly Braun) v. Kujawa, Weston (Third Party) and Warne Bros. (Transport)

Ltd. (Third Party),138 the defendant was not permitted to rely on an exclusion clause in

English when the defendant was aware that the plaintiff was not well versed in that language,

and

(c) this factor is of particular relevance where Malaysia is a multi-lingual land. This fact

should perhaps be appreciated when drafting exclusion clauses where particular notice should

be taken of the language of choice of the general clientele in a particular transaction;

(vii) the clause must be brought to the attention of the client before or at the time the contract

is made;

(viii) the less important the document on which the clause is stated, the less likely the court

27

would presume that the client would read the document;

(ix) the nature of the transaction in that is it of an important nature such that a client would be

vigilant or not, for example:

(a) a railway ticket for a day journey as in Thompson v. London, Midland and Scottish

Railway Company,139 and

(b) a ticket for a deck chair as in Chapleton v. Barry Urban DistrictCouncil;140 and

(x) if the document which contains the exclusion clause is signed by the plaintiff in the

absence of vitiating factors such as fraud or misrepresentation, the plaintiff is likely to be

bound by the exclusion clause whether or not the plaintiff was aware of the existence and

effect of the clause as stated in such cases as Parker v. The South Eastern Railway Company;

Gabell v. The South Eastern Railway Company141 and L'estrange v F. Graucob, Limited.142

Contra Proferentum

The term 'contra proferentum' has been defined in Trayner's Latin Maxims as:

Against the person from whom it proceeds or against the person advancing it 143

The case of Wallis, Son & Wells v. Pratt & Haynes144 involved a contract for the purchase of

common English sainfoin. The plaintiffs alleged that the defendants sold them a different kind

of goods than what was promised and sued the defendants. The defendants alleged that they

were not liable due to a clause in the contract stating:

Sellers give no warranty expressed or implied as to growth, description or any other matters.145

The House of Lords unanimously146 held that the exclusion clause did not exempt the

defendants from liability for breach of warranty in not delivering the goods as contractually

stipulated.

Lord Loreburn LC stated:

If a man agrees to sell something of a particular description he cannot require the buyer to take something which

is of a different description, and a sale of goods by description implies a condition that the goods shall correspond

to it.147

There is no doubt that when you a