McCutheon v David MacBrayne Ltd [1964] 1 WLR 125

Notice of term excluding liability for loss at sea; whether knowledge of term established


McCutheon delivered his car to the defendant shipping company for carriage from the Hebrides to the mainland. The car was destroyed when the ship sank because of the company’s negligence. The company’s usual practice was to issue a risk note to customers exempting them from liability for losses resulting from their negligence. McCutheon had signed such notes on previous occasions but had never read the terms. On this occasion, no such risk note was supplied, and McCutheon sought to recover the value of his car.


The company maintained the exclusion clause referred to in the risk note was incorporated into the oral contract because of the parties’ previous course of dealing. They argued the conditions of carriage were prominently displayed on notices at their offices and as McCutheon had signed such risk notes before, he should be deemed to have knowledge of them. McCutheon contended he had never read the terms on the previous occasions he had transacted with the defendants. He contended the clause could not be relied upon because it had not been successfully imported in to the instant oral contract.


McCutheon was successful in his claim. The clause had not been successfully incorporated into the contract. McCutheon could not be bound by a clause on the basis of a previous course of dealing when he did not have knowledge of the specific term. Previous dealings are only capable of importing a term into a later contract where actual or constructive knowledge of the terms is established, and the parties assent to them.