Legal Case Summary
McCutheon v David MacBrayne Ltd [1964] 1 WLR 125
Notice of term excluding liability for loss at sea; whether knowledge of term established
Facts
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.
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 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.
Decision / Outcome
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.
Updated 19 March 2026
This case summary accurately states the facts, issues, and outcome of McCutcheon v David MacBrayne Ltd [1964] 1 WLR 125 (note: the case name is sometimes spelled ‘McCutcheon’ rather than ‘McCutheon’). The legal principles described — concerning incorporation of exclusion clauses by a previous course of dealing, and the requirement for actual or constructive knowledge of specific terms — remain good law. The case continues to be cited as authority on incorporation by course of dealing in contract law. No subsequent legislation or case law has overturned these principles, though readers should be aware that the broader law on unfair contract terms and exclusion clauses has developed significantly through the Unfair Contract Terms Act 1977 and the Consumer Rights Act 2015, the latter of which now governs consumer contracts and imposes controls on exclusion clauses that go beyond the common law position illustrated in this case. This article focuses solely on the common law incorporation point, which remains accurate.
