Contract Terms Cases

Question 1

Olley v Marlborough Court Ltd

Answer 1

Timing of Incorporation.
M had a notice in the bedroom to exclude them from liability of theft and loss. O left his keys with the hotel whilst he went away for the day. When he returned he noticed some of his possessions were missing.
Held: M had been negligent and could not rely on the notice as the guests did not see it until they entered the room therefore it could not be included in the contract.

Question 2

Langstane Housing Association Ltd v Riverside Construction (Aberdeen) Ltd

Answer 2

Onerous and Unusual Terms.
L wanted damages against R for breach of contract after a collapse.
In this case: defines an onerous term - “it departs in a material way from the terms that would reasonably be expected to apply to that type of contract.” - Lord Glennie [41].

Question 3

Interfoto Picture Library Ltd v Stiletto Visual Programme Ltd

Answer 3

Onerous and Unusual Terms.
An advertising company received 47 photos and a delivery note which stated that the photos were to be returned in 14 days otherwise there would be a £5 charge for each photo every day. They refused to pay the invoice of £3783 and it was held that this was an onerous term.

Question 4

Montgomery Litho Ltd v Maxwell

Answer 4

Onerous and Unusual Terms.
A printing firm raised an action against N, the director of the other company, to receive the payment of £5245 for the supply of printing before the company went into liquidation. Although the director was liable to pay the sum, it was held that on the basis of Interfoto Picture Library ltd v Stiletto Visual Programme ltd that the term was onerous and unusual .

Question 5

Parker v The South Eastern Railway Company

Answer 5

Incorporation.
Left a bag in the cloak-room and paid 2.d. The ticket was given to him in exchange for the bag. It had a number and a date on it. On the reverse it stated that they would not be responsible for packages valued more than 10l. Parker valued his at 24l 10s.
It was held that it did not matter that Parker had not read the terms or understood them, the railway were not responsible as they had attempted to give plenty notice which was reasonably sufficient.

Question 6

Taylor v Glasgow Corporation

Answer 6

Incorporation.
Woman paid to use the public baths in Glasgow. When she paid she received a ticket which had conditions on the back. She raised an action for personal injury. The ticket she was given tried to exclude the company’s liability,
Held - The ticket was different to tickets of transport and could be viewed as a voucher.
Not all tickets are valid for incorporating contract terms.

Question 7

Grayston Plant Ltd v Plean Precast Ltd

Answer 7

Incorporation.
M hired a crane from H which when M was using became overbalanced resulting in damage. H sent relevant documents on M’s request as the business’ usual practice. When M hired another crane, there was no documents sent.
Held - H had not done enough to make the conditions clear to M as this meant that he was liable for any damage.

Question 8

Krupp v John Menzies Ltd

Answer 8

Rectification.
The pursuer (K) had a formal arrangement with the hotel manager which entitled K to a fixed salary but also had to pay one fifth of the net annual profit. There was a disagreement between whether it was supposed to be one tenth rather than one fifth - a mathematical error.
Held - Pursuer was allowed to show proof before a decision was made.

Question 9

Law for Rectification

Answer 9

Law Reform (Miscellaneous Provisions)(Scotland) Act 1985. 
Sections 8 and 9 
S8(1)(a) - gives courts discretionary power to rectify a document if the terms expressed do not represent what was agreed.

Question 10

MacDonald Estates Plc v Regenesis (2005) Dunfermline Ltd

Answer 10

Rectification
Property Development company raised claim for fees to be covered when applying for planning permission although the rest of the project did not succeed. The contract included an entire agreement clause but this did not prevent the possibility of rectification.

Question 11

Entire Agreement Clause

Answer 11

Contract Terms
States that all the agreed terms are included in the contract.
Contract (Scotland) Act - section 1

Question 12

Implied Terms - Legislation

Answer 12

Terms Implied in Law - Legislation
Consumer Rights Act
Consumer Contracts - s2
Goods - ss9-11

Question 13

Implied Terms - Common Law

Answer 13

Terms Implied in Law - Common Law
Commercial Contracts
Where no express terms there will be implied terms.
Services to be exercised to the ordinary standard of care.

Question 14

Implied Terms - Custom

Morton v Muir Bros

Answer 14

Terms Implied in Law - Custom
Firm A designed lace products which were contracted to be made by firm B. A said that the designs remained theirs.
Held - It was custom in the valley that the owner would manufacture the product unless it was expressly said or implied otherwise so in the contracts it was implied to now belong to B.

Question 15

Implied Terms - Generally Implied
Example
Case - Mackay v Dick and Stevenson

Answer 15

Terms Implied in Law - Generally Implied
Example - to cooperate in any contract where cooperation is necessary.
In the case MacKay did not cooperate in regards to testing the machinery but the other party did fulfil their obligation therefore it was held that MacKay still had to pay.

Question 16

North American and Continental Sales Inc v Bepi

Answer 16

Implied Terms - Terms in Fact
N provided B with a system to which B would pay a percentage of royalties back to N. N raised an action as they did not receive payment to which B said that they were under no obligation to use the system.
Held - The term contended for by the pursuer must be implied.

Question 17

Aberdeen City Council v Stewart Milne Group Ltd

Answer 17

Implied Terms - Terms in Fact
ACC sold land to the SMG which the contract included that if they were to sell to a third party then ACC would be entitled to some money. The court implied a term to the contract that the price should be calculated using the open market of the land value as this was what the parties had intended.

Question 18

Muirhead and Turnbull v Dickson

Answer 18

Interpretation of Terms
MT made a deal with D for D to buy the piano paying in monthly instalments. It was ordered for the paino to be redelivered under a lease agreement but it then transpired to be a contract of hire purchase.
Held to be a contract of sale on hire purchase so B was entitled to the piano by paying in instalments.

Question 19

Bank of Scotland v Dunedin Property Investments Ltd

Answer 19

Interpretation of Terms - ordinary meaning
The bank provided a loan which had to be paid back with interest. They also entered into a loan stock agreement but when D terminated their arrangement, B became liable for any breakages as included in the contract.
Held - D was no longer responsible as stated in the contract.

Question 20

Investor Compensation Scheme Ltd v West Bromwich Building Society

Answer 20

Interpretation of Terms - Surrounding Circumstances
The investors lost the right to sue W but based on the surrounding circumstances were able to keep their right to seek rescission of mortgage.

Question 21

Rainy Sky S A v Kookmin Bank

Answer 21

Interpretation of Terms - Business Common Sense
On the construction of advance payment bonds, the bank allowed ship buyers to recover instalments.
Held - Terminology in contract could have more then one meaning. Made the decision which was consistent with the commercial purpose of the bonds and made the most business sense.

Question 22

Arnold v Britton

Answer 22

Interpretation of Terms
Holiday Lets were leased at different rates so there was a dispute.
Lord Neugberger - “what a reasonable person having all the background knowledge which would have been available to the parties would have understood them to be using the language in the contract to mean” (from an earlier case) but this approach has been used in more recent Scottish cases.
Held - Appeal dismissed

Question 23

Contra proferentem

Life Association of Scotland v Foster

Answer 23

Interpretation of Terms
One party puts forward a set of non-negotiated terms. If there is a term which is ambiguous then the court will choose the interpretation which is less favourable to the party which created the terms.
She made her bases of her claim to be that she had very goof health and no medical conditions and that her answers were faithful and true.
Held - The insurance company still had to pay out.

Question 24

ParkingEye v Beavis

Answer 24

Interpretation of Terms
Notice in a carpark which stated that there was 2 hours free parking and a £85 fee if you overstayed. B overstayed and was charged but refused to pay.
Held - It was not an unfair term, the price was required for the effective management of the carpark.
The price cannot be challenged as it is a central term and the notice was clear to all users.