Legal Case Summary
McCutcheon v David MacBrayne Ltd [1964] UKHL 4
Notice of term excluding liability for loss at sea; whether knowledge of term established
Facts
Acting on McCutcheon’s instructions, his brother-in-law, McSporran, delivered the car to the defendant shipping company for carriage from Islay 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. McCutcheon had signed such notes on previous occasions but had never read the terms. McSporran had also used the company before, but had sometimes been asked to sign a risk note and sometimes not. On this occasion, no such risk note was supplied, and McCutcheon sought to recover the value of his car.
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Issues
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 McCutcheon had signed such risk notes before, he should be deemed to have knowledge of them. McCutcheon 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 into the instant oral contract.
Decision / Outcome
McCutcheon was successful in his claim. The clause had not been successfully incorporated into the contract. McCutcheon 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. Lord Reid emphasised the absence of a consistent course of dealing and the good-faith acceptance of an oral contract without reference to conditions. Lord Devlin explained that previous dealings could support implication only through actual knowledge of, and assent to, the terms, rather than merely constructive knowledge. The receipt was handed over after the contract was complete, and the displayed notices did not incorporate the conditions. The House of Lords unanimously allowed the appeal and restored the Lord Ordinary’s decision.
Also reported: [1964] 1 WLR 125; [1964] 1 All ER 430; 1964 SC (HL) 28; 1964 SLT 66; [1964] 1 Lloyd’s Rep 16.
