McCutcheon v David MacBrayne Ltd [1964] UKHL Facts: The claimant’s car sank in a car ferry owned by the defendant. The claimant had used the car ferry on a few occasions previously. Sometimes he had been asked to sign a document containing an exclusion clause sometimes he had not been asked to sign a form. On this occasion he had not been asked to sign a document. The defendant sought to rely on the exclusion clause claiming it had been incorporated through previous dealings.
Issues: Was the exclusion clause part of the contract? (Was the risk of an accident incorporated into there contract through a course of dealings?)
Holding: NO - the exclusion clause was NOT part of the contract. There was no consistency in the course of dealings and thus the clause was not incorporated. The defendant was liable to pay damages.
Reasons: Previous dealings are only capable of importing a term into a later contract where actual or constructive knowledge of the terms is established, and the parties assent to them. In this case, the clause had not been successfully incorporated into the contract. McCutheon (plaintiff) could not be bound by a clause on the basis of a previous course of dealing when he did not have knowledge of the specific term. The judge begins his judgment by assessing the relevant principles: the contract was purely oral and any terms on the receipt came after the formation and thus cannot be regarded as terms. As a result there is no doubt the defendant is liable for the damage.
“The only other ground on which it would seem possible to import these conditions is that based on a course of dealing. If two parties have made a series of similar contracts each containing certain conditions, and then they make another without expressly referring to those conditions it may be that those conditions ought to be implied. If the officious bystander had asked them whether they had intended to leave out the conditions this time, both must, as honest men, have said “of course not”. But again the facts here will not support that ground. According to Mr. McSporran, there had been no consistent course of dealing ; sometimes he was asked to sign and sometimes not. And, moreover, he did not know what the conditions were. This time he was offered an oral contract without any reference to conditions, and he accepted the offer in good faith.”
Rule / take away: Recall that (1) industry standard / trade practice, and (2) business efficacy aka good faith term can lead to implied terms
