ABC v Hotel

HotelThis is question 4 that I needed to attempt. The story for this question is that three people – A, B, and C – booked into the hotel using different means. The hotel had an exemption clause for damage or losses and these people had their rooms broken into and items stolen.

The first issue that needs to be established is if and when a contract is in place. The next issue would be whether the exemption clause was incorporated into the contract. The third issue is whether they can take action, and what remedial action.

Formation of Contract
It was established in Thornton v Shoe Lane Parking that the T&C must be made know at the point of contract formation. Clauses cannot be added into the contract after formation, without sufficient notice. Terms were printed on the pillars of a car-park only readable after the person has entered the car-park were held to be invalid as the contract was formed at the entrance.

The first case – A – is a classic case of a click-wrap contract and the receipt rule applies. The contract is formed by the acceptance of the room and by payment of the 10% deposit with credit card, which was received by the hotel.

The second case – B – is a classic case of a telephone contract and the same rule applies. The contract was formed at the point where B agreed to book the room and was heard over the phone by the hotel operator.

The third case – C – is a classic case of a normal store counter contract. The contract was formed when C walked in over the counter to rent a room for the night and the hotel accepted the offer by giving C the keys to the room.

Incorporation of Exclusion Clause
The general rule is that any incorporation of exclusion clauses must be brought to the notice of the adhering party up clearly and before or during the formation of contract.

For A, the signature rule applies. It was established in L’Estrange v F Graucob Ltd that having signed the document, the excuse of not reading it cannot be heard, as long as there was no fraud or misrepresentation. The clause was communicated multiple times up-front and it was possible for A to know of it with usual diligence. A’s tardiness does not excuse the fact that the exemption clause now forms part of the contract.

For B, internet access may not have been available and is the reason why B was booking through the phone. In Parker v South Easter Railway it was held that presuming knowledge of the exclusion is incorrect. When enquired, the T&C given orally were different and did not include the exemption clause. This is a clear case of misrepresentation as in Curtis v Chemical Dyeing Co. Therefore, the exemption clause does not form part of the contract with B.

For C, the clause was given by notice as it was displayed on the back wall of the registration desk. However, the writing was blur and the staff did not clarify this matter to C at any point in the course of dealing. In Sanggaralingam v Wong Kook Wah the court held that there was no evidence that the appellant knew of the notice nor had his attention brought to it, therefore the clause was not incorporated. Therefore, the exemption clause does not form part of the contract with C.

In all three cases, the exemption clause printed behind the doors of each hotel room does not matter at all as the contract was formed before entering the room. This was clearly established in Olley v Marlborough Court Ltd where the court held that the contract was formed before entering the hotel room and the exclusion clause was not incorporated into the contract.

Based on this, I will advise B and C that the exemption clause was not incorporated into their contracts and they are definitely capable of action against the hotel for losses. However, the case for A requires further analysis.

Interpretation of Exclusion Clause
I’m not quite sure about this part yet.

Effect of Negligence
If the thief had managed to enter their hotel rooms due to the cleaning crew negligently leaving the doors unlocked, then things may change. In Canada Steamship Lines Ld v The King it was established that the exclusion clause must express clearly the exclusion of liability for negligence. Since the hotel’s disclaimer does not mention negligence expressly, it means that negligence is not part of the exclusion clause. Therefore, if the loss is due to the cleaning crew negligence, action can be taken by all of them.

New law.

Published by

Shawn Tan

Chip Doctor, Chartered/Professional Engineer, Entrepreneur, Law Graduate.

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