EXCLUSION CLAUSES AND LIMITING TERMS IN CONTRACT
Introduction
Contracts except in some few cases involve reciprocal obligations between two parties. It is not unusual though, to have some clauses inserted in the body of the agreement a clause or clauses excluding or limiting one of the party’s obligations or liability. Many major suppliers of goods and services have such clauses inserted in already prepared contract (standard form contract) documents. Examples abound in this regard. Bills of lading, airline tickets, Insurance contracts, telephone service are few instances (SCHROEDER MUSIC PUBLISHING CO. LTD. V MACAULAY [1974] 3 All E. R. 616).
Cars parked within the Hotel Premises.
It is common to see notice clearly written in many Hotel premises that “cars are parked at the Owner’s risk”. In addition some tags or gate passes that are issued to motorist entering the Hotel premises may also contain similar phrase. It must be pointed out that except in exchange for payment of money no contract could said to have existed in respect of such car parked. (See IMO CONCORDE HOTEL V ANYA [1992] 4 NWRL {pt. 234} 210 at 222). In this situation the issue of liability arising of contract will not arise.
By virtue of Hotel Proprietors Law of Lagos State (Cap 64 Laws of Lagos State 1994) Hotels in Lagos are not liable for loss or damage to cars parked within the Hotel premises subject to fulfilment of specified condition. Section 3 states thus:
3. A hotel proprietor shall only be liable for the property of this guest which is lost, stolen or damaged within the premises of the hotel unless –
- the loss or damage is caused by the misconduct or negligence of the guest who suffers the loss or damage; or
- the loss or damage arises from an act of God or of alien enemies; or
- the loss or damage is in respect of a motor vehicle or property left therein.
The law further provides in Section 4
4. (1) Without prejudice to any other liability incurred by a hotel proprietor with respect to property brought to a hotel by a guest, the hotel proprietor shall not be liable to make good to any guest any loss of or damage to any such property except where –
- at the time the loss or damage, sleeping accommodation at the hotel had been engaged for the guest; and
- the loss or damage occurred during the period of engagement for the person was a guest at the hotel and entitled to use the accommodation so engaged.
(2) Without prejudice to any other liability or right of his with respect to it, a hotel proprietor shall not be liable to make good to any guest of his any loss of or damage to any motor vehicle or trailer brought to the hotel or nay property left therein; but nothing in this Law shall be construed as precluding into a contract for the safety of the motor vehicle or property therein.
Section 8 of the Law states thus:
8. (1) Every hotel proprietor shall cause the Notice in the Schedule to this Law, printed in plain type, to be exhibited in a conspicuous part of the hall or entrance to his hotel, and also in the sleeping room.
(2) The Notice referred to in subsection (1) shall be both in the English language and in another Nigerian language widely spoken in the area where the hotel is situated.
(3) A hotel proprietor shall be entitled to the benefit of Section 6 in respect of such goods and chattels only as are brought into his hotel while such Notice as is mentioned in this Section is exhibited in the manner prescribed.
The Notice in the schedule read thus:
NOTICE TO BE GIVEN BY THE HOTEL PROPRIETOR
NOTICE
LOSS OR DAMAGE TO GUEST’S PROPERTY
Under the Hotel Proprietors Law a hotel proprietor may in certain circumstances be liable to make good any loss of or damage to a guest’s property even though it was not due to any fault of the hotel proprietor or the staff of the hotel.
2. This liability however –
- extends only to the property of guests who have engaged sleeping accommodation at the hotel;
- is
limited to
N200 (two hundred naira) for any one article and a total ofN2,000 (two thousand naira) in the case of any one guest, except in the case of property which has been deposited or offered for deposit, for safe custody;
- does not cover motor cars or other vehicles of any kind or any property left in them but the hotel proprietor and the guest may enter into a contract for the safety of the motor vehicle.
3. This Notice does not constitute an admission either that the Law applies to this hotel or that liability thereunder attaches to the hotel proprietor of this hotel in any particular case.
The combined effect of all the provisions of the law referred to is that Hotel proprietors in Lagos State not liable for loss or damage to Motor vehicles or trailers brought into their premises. For any hotel to rely on this protection, it must show that it has complied with the Notice as stipulated in the schedule to the law. Due to ignorance of this law or otherwise, no such notice is seen displayed in any hotel in Lagos. It therefore implies that most hotel in Lagos will not be able to take solace under this law if sued to court for loss of motor vehicle in their premises where cars are parked on payment of money.
It is not out of place to find some hotels and events centre imposing some levies on customers for parking their vehicles at their car park. Section 4 (2) of the Hotel Proprietors Law provides that –
“Without prejudice to any other liability or right of his with respect to it, a hotel proprietor shall not be liable to make good to any guest of his any loss of or damage to any motor vehicle or trailer brought to the hotel or any property left therein; but nothing in this Law shall be construed as precluding into a contract for the safety of the motor vehicle or property therein”
This law recognises the fact that a hotel could enter into a contract with their guest for the safety of their vehicle. It must be borne in mind that such contract may not be so titled. But so long the Hotel charges for the parking of car within its premises such duty of protection may arise. The court of appeal in Imo Concorde Hotel V Anya absolved the Hotel of liability for the loss of the guest vehicle in their premises on ground that no payment was effected for such by the guest. It follows that payment by guest could ignite liability.
The question that comes to mind is that can the Hotel exclude liability where payment had been made for such car parking service by display of cars are parked at owner’s risk either at the premises or on the vehicle pass?
The courts over the years have propounded rules regarding the treatment to be accorded an injured party complaining about exclusion clauses which are not contained in a contractual document signed by him. In PARKER V SOUTH EASTERN RAILWAY CO. [1877] 2C.P.D. 416. P deposited a bag in the S cloakroom. He paid 2 Pence and was issued a receipt by S clerk. The receipt contained some information as well as the words “se back”. The back of receipt contained several clauses including that limiting the liability of S. The bag was later lost. In defence to the claim of P, S relied on exclusion clause limiting its liability. The court decided in favour of P. On appeal, the Court of Appeal lay down the under-listed guidelines for determining liability in the case of unsigned documents:
a) If the receiver of the ticket did not see or know that there was any writing on the ticket he is not bound by the condition.
b) If he knew that there was writing on the ticket and knew or believed that the writing contained condition, then he is bound by the conditions.
c) If he knew there was writing on the ticket, but did not know or believe that the writing contained conditions, nevertheless he would be bound if the party delivering the ticket to him had done all that was reasonably sufficient to given him notice that the writing contained conditions.
In case of gate pass, if it is issued in a way that the guest could not have imagine that is more than receipt for payment made, exclusion of liability indicated therein will not suffice. In THORNTON V SHOE LANE PARKING [1971] 2 QB 163 involving automatic car park, it was held that no reasonable person would expect the ticket to contain more than acknowledgement of payment. Hence the exclusion clause sought to be relied upon could not be effective.
Where the notice excluding are displayed at conspicuous part of the premises where there is no way the guest will not notice same, the liability of the Hotel for such disclaimed loss would have been successfully excluded. In Imo Concorde Hotel V Anya Edozie J.C.A. held that where the duty of car park owner would have existed, it could be excluded by the occupier by exhibiting of the appropriate notice to that effect.
For exclusion clause by mere notice to be effective, such notice must have brought to the attention of the other party before the contract is signed. In OLLEY V MARLBOROUGH COURT [1949] 1K.B. 532, A couple on completing all registration formalities was thereafter checked into their room. On getting to the room saw a notice disclaiming liability of any loss of articles not submitted to the management. The court rejected the defence put by the Hotel on the basis of this exemption notice in a case filed by the guest for the loss of some of their effects as the contract was concluded at the reception desk.
Signed Document.
Where a document signed contained an exclusion or exemption clause a party to the agreement is bound by the said clause except such document was a product of fraud, duress or misrepresentation (L’ESRANGE V GRAUGOB [1934] 2K.B 394 D.C.).
Similarly, a party is liable if he signed a document which contains a reference to another document containing exemption clause (see CHAGOURY V ADEBAYO [1973] 3 U.I.L.R. 532).
In the process of pool staking Mr. A signed a document including the words “I have read and agree to the Rules and conditions”. The said Rules and conditions contained clause empowering the pool company to cancel any entry and refuse payment. Mr. A later sued the pool company for the payment of 500 pounds he claimed to have won. The pool company relied on the exemption clause in the Rules and condition to avoid liabilities. The trial court rejected the pool company’s defence on ground that the pool company had not done what is reasonably necessary to draw the attention of Mr. A. to the exclusion clause. On appeal, the court reversed the trial court decision and held Mr. A bound by the other document which he certified to have read in the main document. Where a party has signed a document which forms part of the contract and contain reference to other documents, the party will be bound by such document whether he read them or not.
Nevertheless, the party seeking to exempt his liability through another document other than one signed must do all that is necessary and reasonably sufficient to bring the rules and conditions to the attention of the other party (CHIKE ATU V FACE TO FACE MILLION DOLLAR FIXED ODD POOLS LTD. Suit No. 0/161/72.
LIMITATION TO APPLICATION OF EXEMPTION CLAUSES OPERATION.
(1) The Contra Proferentem Rule.
a) Strict Interpretation –
Any ambiguity or uncertainty in the meaning, extent and scope of any exclusion clause will be construed more vigorously against the party that insert same in the contract.
HOUGHTON V TRAFALGAR INSURANCE [1954] 1 Q.B. 247. The case involved a five-seater car which was involved in accident while carrying six passenger against the driver’s Insurance policy which exempted them from any liability for any damage caused whilst carrying baggage in excess of which the vehicle was constructed. The court held the exemption clause regarding excess load only applied to load and not excess passenger.
b) Negligence.
Except clearly stipulated exemption clauses are not allowed to exempt liability arising from negligence (see ATTORNEY-GENERAL OF BENDEL STATE V UBA [1986] 4 NWLR {pt.37} 547).
- Third Parties.
An exemption clause will not as a matter of general role be made to protect someone who is not a party to the agreement. This is in line with the principle of privity of contract. That is a person not a party to contract cannot benefit from it.
(2) Fundamental Breach
An exemption clause will not be allowed to be relied upon by a party to enable him walk out of his primary obligation under the contract. For instance, a exemption clause which will have effect of a hotel denying a Guest to be allocated a room duly paid for will not be recognised by the court. In KARSALES (HARROW) LTD. [1956] 2 All E.R. 866 at p.868) state thus:
It is now settled that exempting clauses, or this kind, no matter how widely they are expressed, only avail the party when he is carrying out the contract in its essential respects. He is not allowed to use them as a cover for misconduct or indifference or to enable him to turn a blind eye to his obligations. They do not avail him when he is guilty of a breach which goes to the root of the contract. It is necessary to look at the contract apart from the exempting clauses and see what are the terms, express or implied, which impose an obligation on the party. If he has been guilty of a breach of those obligations in a respect which goes to the very root of the contract, then he cannot rely on the exemption clauses.
In ADEL BOSHALLI V ALLIED COMMERCIAL EXPORTERS LTD. [1961] 1 All N.L.R. 917.
In this case, in defence to supply of cloth which were found inferior to the sample the supplier sought to rely on an exemption clause which state thus:
“For goods not of United Kingdom origin we cannot undertake any guarantees or admit any claims beyond such as are admitted and record by the manufacturers”. The Privy Council held that the clause did not avail the respondents any protection.
Where cars are accepted for parking into a premises on
payment of specified fees, while the owner of the premises could exclude
liability for loss and damage to the car, it will however not be acceptable if
receipt issued or document signed in respect of the car park absolve the owner
if no space is available for parking at the premises. See INTERNATIONAL MESSENGERS (NIG) LTD. V
PEGOFOR INDUSTRIES LIMITED [2005] 7 CLRN 1.
Pegofor Industries Ltd. sent some mechanical component in view of the
urgency required for its repair through the defendant/Appellant. The component was lost. The claim of the defendant was predicated
exemption clause on the bill signed by the plaintiff Managing Director limiting
their liability to N500.00 in the event
of loss or damage of the consignment.
The Supreme Court held that since the defendant did not only fail to freight to plaintiff package as contracted, but lost same the defendant was guilty of fundamental breach of contract.
Non Est Factum
Cases on non est-factum occur when a person is induced by the false statement of another to sign a written document containing contract that is fundamentally different in character from that which he contemplated. As a matter of general rule the courts is always wary to apply this rule as in doing otherwise could cause confusion. In SOUNDERS V ANGLIA BUILDING SOCIETY [1971] A.C. 1004 at 1032 Lord Denning stated thus:
“whenever a man of full age and understanding who can read and write signs a legal document which is put before him for signature – by which I mean document which, it is apparent on the face of it, is intended to have legal consequences – then, if he does not take the trouble to read it, but signs it as it is, relying on the word of another as to its character or contents or effect, he can not be heard to say that it is not his document. By his conduct in signing it he has represented to all those in whose hands it may come, that it is his document; and once they act upon it as being his document, he cannot go back on it, and say it was a nullity from the beginning”.
In MUSKHAM FINANCE LTD V HOWARD [1963] 1 Q.B. Donovan hj. Said
“The plea of non est-factum is a plea which must necessarily be kept within narrow limits. Much confusion and uncertainty would result in the field of contract and elsewhere if a man were permitted to try to disown his signature simply by asserting that he did not understand that which he had signed”.
A document will be held to be void only when the element of consent to it is totally lacking that is, more concretely when the transaction which the document purports to effect is essentially different in substance or in kind from the transaction intended (See GALLIE V LEE [1971] A. C. 1004.
For the plea of non est-factum to be accepted fraud must be proved by the party asserting it. See George V Dominiors Flour Mills [1963] All N.L.R. 71. It was held that where a person of full age and discretion executes a formal deed in full knowledge of the nature of the document it will not avail him to seek to nullify the contract by complaining that he did not know the content of the deed.
In EGBASE V ORIAREGHNA [1985] 2 N.S.C.C. {Vol 16 pt.11} p. 1219 where the defendant claimed that he never understood an agreement signed by him which named the parties as “vendor” and “purchaser” in respect of his house and land, the Supreme Court held thus
“The respondent has been found by the learned trial judge to be of full age and understanding. He was found literate. He signed the document which his own solicitor at his own request prepared, read to him and placed before him for signature. It is now idle of him to turn round and feign ignorance. The defence of non est-factum fails”.
Hospitality And Tourism 