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Problem Type Question

Alfred went on a holiday in Phuket. Whilst on the holiday beach resort, he hired a deckchair for use on the beach. Rental of the chairs were controlled by the resort owners. Alfred paid a fee for the use of the chair in return for which he received a ticket. There were conditions written on the back of the ticket, one of which was a clause with the following words:

“The owners of the resort will not be liable for any accident or damage arising from the hire of the chair”.

When Alfred sat on the chair, it collapsed and injured his back causing him to walk with a permanent limp. He was required to be hospitalized for 10 days and had to go on medical leave for 3 months. In addition he is now required to be on medication for life and his employers have told him that they can no longer employ him. His employment contract does not cover medical benefits.

Advise the resort owners whether they could be held liable for the injury suffered by Alfred and the basis of your argument in law. If successful in his action, what can Alfred claim in law from the resort owners?

DO REMEMBER to tackle problem type question the KEY is IRAC: Identify, State the Rules of Law, Apply and Conclude.


(Identifying the Issues)

The main issue in this question involves the validity and enforceability of the exemption clause, which the resort owners have inserted into the back of the ticket; more particularly we have to examine:

1. The incorporation of the clause into the contract by way of notification via the ticket.

2. The possible neutralization of the exemption clause under the provisions of the Unfair Contract Terms Act.

A secondary issue involves the question of the resort owner’s liability in tort for negligence and the extent and quantum of damages, which Alfred is entitled to claim.

(Defining and Explaining the RULES of Law/Legal principles)

A party to a contract who seeks to rely on the protection of an exemption clause has to show that it has become incorporated (included) into the contract. In the case of documents, which do not require signing, e.g. a ticket, the exemption clause will only form part of the contract if 2 conditions are satisfied. They are:

1. The unsigned document containing the exemption clause can reasonably be regarded as a contractual document would a reasonable man assume that the document was to be a contractual document? In the case of Chapelton v. Barry UDC, the plaintiff hired a deckchair from defendant on the beach. He made payment and was given a ticket, which he did not read. The chair collapsed when he sat on it. He sued the defendant for injury sustained. The defendant relied on a clause on the back of the ticket, which excluded liability for any damage or injury arising from the hire and use of the chair. The court held the defendant was liable because the exemption clause on the ticket did not form part of the contract. It was merely a receipt for payment and cannot reasonably be regarded as a contractual document.

2. The party relying on the exemption clause must take reasonable steps to bring the clause to the notice of the other contracting party either before or at the time contract is made. Thornton v. Shoe Lane Parking and Olley v. Marlborough Court Hotel Ltd are 2 cases that help to illustrate this point.

3. Even if an exemption clause has been successfully incorporated, it may be neutralized and thus made void by the Unfair Contract Terms Act. This Act applies to liabilities that result in the Assignment of a business and provides (under Section 2) that an exemption clause that excludes the liability for negligence resulting in death or personal injury is automatically void and of no effect.

4. Negligence is now by far the most important and commonest of torts. The growth of this tort is the result of a number of factors, one of which is a greater awareness of the legal rights of individuals when they suffer personal injury or damage to their property through some other people's fault. In the case of Blyth v. Birmingham Waterworks Co. 1856, negligence is defined as:

The omission to do something, which a reasonable man, guided upon those considerations, which ordinarily regulate the conduct of human affairs, would do. Or doing something, which a prudent and reasonable man would not do.

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Before an action for damages (compensation) can be sustained, the plaintiff must prove the following:

a. The defendant was under a duty to exercise care towards the plaintiff. The landmark case of Donoghue v. Stevenson (1932) developed a general test for deciding whether a duty of care exists.

b. There was a breach of that duty.

c. The plaintiff sustained injury, loss or damage as a result of that breach of duty.

d. The breach of duty was the proximate cause of the injury, loss or damage sustained. This means that the plaintiff must be able to prove that the defendant's act or omission was the proximate cause of the injury, loss or damage. If there are any intervening events between the defendant’s act and the damage which occurs over which the defendant has no control and which effectively "break the chain of causation", the defence may be raised that the damage is "too remote". The court has ruled in a number of occasions that damage would be too remote if it is not reasonably foreseeable. See: Overseas Tankships Ltd v. Mort Docks and Engineering Co Ltd 1961. Later cases point out that what has to be foreseen is the type or kind of harm and not the extent of harm. Thus in Bradford v. Robinson Rentals Ltd 1967, the defendant carelessly exposed the plaintiff to extreme cold during his duties as an employee. Consequently he suffered frostbite. What was foreseeable was something such as a chill. Nevertheless the court held the defendant employers liable for the frostbite, as it was a more severe manifestation of a type of harm that was foreseeable.

(The application and Conclusion)

Applying the law to the scenario as given, it would seem that the exemption/exclusion clause appears not to have been effectively “incorporated” into Alfred’s contract with the resort owners since it was placed in an obscure part of a ticket, where a reasonable person would not be expected to find such an exemption clause. In any case a “ticket” is not the proper place to include contractual terms as established in Chapelton’s Case. More importantly, even if the exemption clause could somehow conceivably be considered valid and effective, the provisions of Section 2 of The Unfair Contract Terms Act would have effectively neutralized it and the clause would ultimately be void. Turning to the resort owner’s liability in the tort of negligence in respect of Alfred’s injuries, it is quite clear that their carelessness had caused Alfred to fall and sustain his injuries. The question is whether the losses were too remote? On the basis of Bradford’s Case it would seem that Alfred’s initial injury and loss was of a type or kind that was reasonably foreseeable. The fact that he now walks with a permanent limp and has to on medication for the rest of his life can be seen as a more severe manifestation (over time) of the type or kind of injury or loss Alfred initially suffered, so too with his loss of employment. If Alfred succeeds in his action, he is likely to be compensated for the injury itself, medical expenses (past, current and future), pain & suffering, loss of future earnings or earning capacity and loss of amenities.

In conclusion as I am advising the resort owners on the validity and effectiveness of the exemption clause I would categorically advise that there is little prospect in successfully defending Alfred’s claim as the courts are very likely to “bend over backwards” to decide in favour of a consumer (as Alfred surely is, in this instance). The management of the resort should therefore consider settling the claim in the best possible terms without going to court as the negative publicity may further harm its reputation and hence its long term business interests. In future the resort owners may wish to look into giving due prominence to their exemption clauses at the point of formation of the contract i.e. at their ticketing booths and not place it in a ticket/receipt interspersed with other terms and conditions. They should in future also not expect to be able to exclude their liability for any losses resulting from death or personal injuries caused by their own negligence, since this attitude appears to offend the provisions of the Unfair Contract Terms Act with regard to death and personal injuries.

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