Hollier v Rambler Motors (AMC) Ltd [1971]

Hollier v Rambler Motors (AMC) Ltd [1971] EWCA Civ 12 addressed the issue of incorporating terms into a contract and the interpretation of exclusion clauses, displaying a notably cautious stance towards such clauses.

Walter Hollier had engaged the services of Rambler Motors, an automobile repair shop, on multiple occasions over five years. Typically, he signed an invoice containing an exclusion clause exempting the company from responsibility for fire damage to customers' cars on the premises. However, on this specific occasion, Hollier did not sign the form. Unfortunately, a fire ensued due to faulty wiring in the garage, leading to the destruction of Hollier's car. As a result, Hollier filed a lawsuit against Rambler Motors seeking reimbursement for the car's cost.

The Court of Appeal ruled that the prior course of dealing did not incorporate the exclusion clause into the contract due to the lack of a consistent pattern in their interactions. Even if the clause were incorporated, the court held it would not effectively absolve Rambler Motors from liability since it extended beyond negligence. Applying the contra proferentum rule, the court interpreted the clause against the party relying on it. Contra proferentum dictates that, in cases of ambiguity or uncertainty in contractual terms, interpretation should favour the party that did not draft the terms. The court stressed that exclusion clauses should employ clear and plain language, particularly when aiming to exclude liability for negligence. The language should unambiguously convey its intended meaning to an average person. The court expressed reluctance to permit parties to shield themselves behind ambiguous language that might mislead customers.

The case underscores the court's wariness regarding the exclusion of liability for negligence, emphasising the necessity for clarity in contractual terms. It establishes that customers could reasonably interpret an exclusion clause to mean that the defendants were not liable for a fire caused without their negligence. Additionally, the court determined that three or four transactions over a five-year period were insufficient to incorporate an exemption clause into the consumer contract.

This case illustrates the court's careful scrutiny of exclusion clauses and its commitment to safeguarding consumers from potentially misleading or ambiguous terms.
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