Olley v Marlborough Court Hotel [1949]

Olley v Marlborough Court Hotel [1949] 1 KB 532 is an English contract law case concerning exclusion clauses. The case established that a representation made by one party cannot become a term of a contract if made after the agreement was formed; the representation must be made at the time the contract is formed.

Mrs Olley, a long-staying resident at Marlborough Court Hotel, had her fur coat stolen from her room. The hotel pointed to an exclusion clause on a notice behind a door, stating that they would not be responsible for lost or stolen items unless handed to the manageress for safe custody. Mrs Olley contested the incorporation of this clause into the contract.

The court, consisting of Denning LJ, Singleton LJ, and Bucknill LJ, found that the hotel had failed in its duty of care under the contract and the Innkeepers' Liability Act. They ruled that the disclaimer was not part of the contract formed at the reception desk; therefore, the hotel could not rely on it. The court emphasised that to exempt oneself from common law liability, clear terms and an intention to be legally bound must be proven.

The court also discussed the effectiveness of notices placed in bedrooms, stating that such notices do not automatically form a contract. Even if Mrs Olley agreed to be bound by the notice's terms, the court held that the exemption from liability for negligence must be clear on the face of the contract. The notice was interpreted as a warning against liability in the absence of negligence, not as a contractual exemption from common law liability for negligence. The appeal was dismissed, upholding that the hotel could not rely on the exclusion clause.

This case is significant for establishing the principle that a representation must be made at the time of contract formation to become a term of the contract. It highlights the importance of clarity and intention in incorporating exclusion clauses into contracts, particularly those communicated through notices.
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