Problem Set 6

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Apr 3, 2024

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Problem Set 6 1. Sanjukta’s family had regularly employed Jim over the past five years for servicing and repair work for the family cars. When Sanjukta took the car to the garage on 15 April he entered an office. On the wall behind the reception desk a small notice was displayed stating: “ Customers are kindly invited to note that all vehicles are accepted only subject to the conditions on our receipt forms.” On the receipt form was Sanjukta’s family name , a description of the car and the work carried out, a statement of the amount owing and an acknowledgement of payment of that amount. The following words were also printed at the bottom of the receipt: " We regret that we cannot accept any responsibility for damage or loss caused to customers' vehicles by fire, vandalism or otherwise howsoever occurring .” That evening thieves entered the garage and stole the sound system (valued at $500) that Peter had installed in the car. The thieves were able to enter the garage because Sam forgot to lock-up when he left for the night. On 16 April, having completed the repairs, Jim used the car to drive to his girlfriend's house. While the car was parked outside the house, someone (who has not been identified) crashed into the car causing $7,500 worth of damage. Advise Jim if he has any liability in these circumstances. Here the first issue is whether the exclusion clause is incorporated. There is an issue here with reasonable notice of the exemption clause. The small notice at the reception desk was observed by Sanjukta only after he had already paid for the work being done. Using the authority of Thornton v Shoe Lane Parking , much like the ticket that specified that ‘it is issued subject to the conditions of issue as displayed on the premises’, the notice at the reception desk does not reveal the conditions of the contract, nor does Jim make Sanjukta aware of such conditions. It is not

until after the work is paid for that these conditions are revealed on the receipt. Hence it can be said that Jim has not done what was reasonably necessary to bring this exclusion clause to the attention of Jim, considering Sanjukta is only noticing these conditions after having already entered into the contract. Another issue here is that a receipt is not contractual in nature, where using Causer v Browne ‘A reasonable person would have thought that the ticket was just a receipt, not a contract with conditions,’ where typically a receipt comes after a purchase (and hence after a contract is entered) and simply provides evidence of purchase. There could be an alternate view here though, where considering Sanjukta’s family had regularly employed Jim over the past five years, the term could be incorporated by course of dealings. However, using La Rosa v Nudrill despite the potential inclusion of an exclusion of liability clause on previous receipts giving rise to a course of dealings argument. It must be shown that the clause was contractual and that Sanjukta understood they could only agree to enter into a contract on the basis of those terms, which would not be established considering the receipt is not considered contractual nor was it a signed document. Moving onto issue 2: assuming that the terms could be incorporated, is Jim liable for damages to the sound system? According to the Darlington Judgement : Where the meaning is clear and not ambiguous courts will give the contract its simple and ordinary meaning. Here, the exclusion clause seems reasonably clear where the term ‘otherwise howsoever occurring’ is much like the term ‘howsoever caused’ in Sydney Corporation v West, which found that a broadly stated exclusion clause is not necessarily less potent than a more specific clause. Additionally, using Davis v Pearce Parking Station: as it would be quite unlikely for damages to occur without some form of negligence on the part of Jim, this would justify the exemption clause as excluding liability for negligence. Hence, as the damages due to theft were ultimately caused by Jim’s negligence

in leaving the garage unlocked, Jim would likely not be liable for damages to the sound system. However, if an alternate view is taken that the term ‘otherwise howsoever occurring’ is ambiguous then the clause is to be interpreted contra proferentem (Darlington Futures v Delco Australia ). Here, the term ‘Otherwise’ may fairly be construed in the context to mean other things of similar nature to those already mentioned. As acts of vandalism were included in the exclusion clause, it can be inferred that other third-party damages including theft will also be covered under this clause. Hence, theft arising out of negligence would likely be covered by this exclusion clause if ambiguity was said to have arisen. Issue 3 was whether the exclusion clause excluded liability for the damages caused by the crash. As discussed, the term ‘otherwise’ suggests that negligence as well as third party destruction will likely fall under this exclusion clause. However, here using Sydney Corporation v West, the four corners rule would apply as the exclusion clause can only exclude liability for something that is reasonably something you had to do under the contract. As, it is not reasonable under the contract for Jim to remove a car from the garage and use it for his own personal use. The damage that was caused whilst the car was not in the garage would not fall under the exclusion clause, making Jim liable for damages. 2. On one of his visits to Fitness Last, Peter (whom we met in Problem Set 5, problem 3 when he joined Fitness Last), Georgina attempted to entice Peter to continue training by telling him about a promotion: “Today happens to be the last day for a promotion we’re running. You can sign up for six free 30-minute personal training sessions with one of our highly qualified instructors.” Peter thought this might help him get a better fitness routine and asked how he can sign up for the free sessions.

Georgina explained: “ Personal trainers can be found on our website, which also contains further information concerning trainer qualifications and their rates.” When Peter went to the Fitness Last website, in the section on “Personal training” he saw photos of the personal trainers with their qualifications and rates. Within the section there was a link on “Rules for good training”, which Peter did not click on. The link leads to a webpage with rules about carrying a personal towel when training, wiping down the equipment and being courteous to trainers. One of the rules stipulates that the trainers are not employees of Fitness Last but independent contractors . Peter chose Dana for his free personal training lessons, but was told that she is overbooked. Georgina arranged for Peter to be paired with Jose, one of the new trainers who was not listed on the website. Peter was not too happy with Jose, who spent the first and second sessions just chatting about Peter’s goals. During the third session, Peter started doing work-outs and using the equipment. Towards the end of the third session, Peter injured his back as he was trying to do push-ups under Jose’s direction. The injury was quite serious, involving significant medical expenses. Peter also discovered that Jose had no previous personal training experience or qualifications. Can Peter sue either Fitness Last or Jose to recover for his injuries? Clause 12: The client uses the gym’s equipment at his or her own risk. Fitness Last does not accept responsibility for any loss, damage or personal injury suffered. Fitness Last acts on behalf of its employees and contractors for the purposes of this agreement. The first issue here is whether the precontractual oral statement made by Georgia is an express term or not. Georgia states that Peter can sign up for a session with ‘ one of our highly qualified instructors’. It needs to be determined if this is an express term or not.

Here, Georgia who is expected to have special knowledge of Fitness Last is making a representation that their personal trainers are ‘highly qualified instructors’ which can be found on their website with further information concerning qualifications. Georgia’s statement could be considered a warranty where according to Justice Denning in Chess v Williams : ‘When the seller states a fact which should be within their own knowledge and of which the buyer is ignorant, if it is intended that the buyer should act on it and he does so, it is easy to infer a warranty.’ Here, it could be argued that Georgia on behalf of FitnessLast was making a promise about the quality and qualifications of their trainers, thus making this representation sufficiently promissory. If it is found that Georgia made this statement with the intent to induce Peter to sign the contract, and that Peter relied on the fact that trainers were highly qualified, then it could be recognised that FitnessLast established a warranty. The second issue here is who the exemption of liability clause covers, and who proceedings should be made against? Despite the personal training sessions requiring the formation of a new contract, Peter is still bound by the initial contract and its terms, as he is still a gym member. Hence, we observe clause 12 under the original contract which was incorporated considering it was already signed by Peter. The clause says that a client uses the gym’s equipment at his or her own risk , and fitness last does not accept responsibility for any loss, damage or personal injury . - if asked if a collateral contract could apply?  It could be argued that a collateral contract existed as Peter relied on this statement, that trainers were highly qualified. And it was this statement that induced him into signing the main contract and the consideration would be entering into the main contract. Promissory estoppel?  Would be difficult to establish unconscionability

The clause also states that fitness last acts on behalf of employees and contractors for the purposes of this agreement . In this case, Peter enforced a contract with Fitness Last for 6 personal training sessions. As Jose who was Peter’s personal trainer is an independent contractor according to the ‘Rules for good training’, the question here is whether Jose has provided good consideration to be regarded as a party to the contract and thus to have the benefit of the exclusion of liability clause. Not only does Clause 12 expressly state that fitness last acts on behalf of contractors, but additionally by using New Zealand Shipping v Satterthwaite – in Jose performing the duties expected of him as a personal trainer, he had hence given good consideration for the agreement, meaning he would reap the benefit of the exclusion clause. SO, the exclusion clause applies to Jose and Fitness Last will act on behalf of him. I will also note: that the fact that Jose is unqualified does not mean that he did not do his duty, where he did perform three sessions for Peter (despite Peter not being happy with said sessions). Instead, this points towards Fitness Last being negligent in hiring Jose and allowing him to operate his services without qualifications. The third issue is whether the exemption clause covered FitnessLast, for Peter’s injury. According to the exclusion clause the fact that Fitness Last excludes liability for ‘any loss, damage or personal injury’, this is clear and not ambiguous as per the Darlington Judgement , where its simple and ordinary meaning would exclude Fitness Last’s liability for Peter’s injury. However, if it was found that Georgia’s statement was a warranty: that all Fitness Last trainers are highly qualified, then considering Jose was both not qualified nor was his information contained on the website. Peter can argue that he was led to believe that the personal trainer was qualified and therefore relied on that warranty when agreeing to continue to use the gym and its equipment. As Peter injured himself under the supervision of Jose, using the authority of the case of TNT v May , the employment of Jose as an unqualified trainer was arguably outside the scope of the agreement as contemplated by the parties, where trainers were expected to hold qualifications according to the warranty.

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