Exam 10: Identifying and Interpriting Contracual Term

According to the Canada Steamship rules (Canada Steamship Lines Ltd v. The King (1952)), a clause which purports to exempt one party for liability in negligence will be construed to cover negligence liability if it expressly exempts such liability. Exempting liability for 'loss whatsoever or howsoever occasioned' is not sufficiently express. Such a clause will only be construed to cover negligence liability where the words used are wide enough in their ordinary meaning to cover negligence liability, and:

Highland Supermarkets has come up with a promotional idea to have all its employees dress in kilts in the month of May. It arranges for the hire of 500 kilts from Clover Costumes Co for £7,000. Upon delivery, Highland is required to sign an invoice on the back of which are printed Clover's terms and conditions of hire, which Highland doesn't bother to read. Clause 58 of the contract stipulates that the garments must be returned within one week after the end of the month and that any delay will result in a holding fee of £2 per day per garment being charged. Highland's promotional idea is a complete failure and they decide to abandon it. The kilts are collected in the middle of May but are not sent back until the end of the second week of June, four days too late. Clover requests Highland pay the holding fee of £4,000, but Highland alleges the term has not been validly incorporated into the contract. Is Highland right?

Which of the following statements about the interpretation of exemption clauses is false?

Metalworks Ltd wishes to purchase a machine from Koggs Co and is sent an order form, on the back of which are printed Koggs' 'terms and conditions of sale'. According to clause 127: 'all costs made in the course of repairs will be at the buyer's expense'. Metalworks enquires whether this also means the shipment costs if the machine needs to be sent to Koggs' factory for repairs. Metalworks is told that, in such an event, Koggs would cover the costs and Metalworks signs the order form. Four months later, the machine breaks down and Koggs is called to repair it. The repairman suggests to ship the machine back to Koggs' factory. Koggs returns the fixed machine to Metalworks along with an invoice which also includes the shipment costs. Metalworks protests and argues that these costs should be at Koggs' expense, whereupon Koggs reminds it of clause 127 of the contract which refers to 'all costs', making no distinction between the costs of shipment and other costs related to the repair of the machine. Does Metalworks have to pay for the shipment costs?

In Investors Compensation Scheme Ltd v. West Bromwich Building Society (1998), Lord Hoffmann defined interpretation as the 'ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract'. In other words, agreements cannot be interpreted in isolation from the factual matrix in which they were set. Which of the following is part of the factual matrix?

The courts imply terms from the factual context in order to give effect to what courts perceive as the unexpressed intention of the parties. The idea is that, whether through forgetfulness, lack of time, or bad drafting, the parties failed to include a term which they would have done if they had thought about it. Which test do the courts apply when implying terms in fact?

In the past month, Anglo Lumber Co has concluded a number of contracts. In which of the following cases have its standard terms been incorporated?

Where a contract is written, parties can never adduce extrinsic evidence to add to, vary, or contradict the terms contained in that document.

Standard form contracts may not be used by commercial parties dealing with consumers.

In Investors Compensation Scheme v West Bromwich, Lord Hoffmann says that 'if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had'. This means that, where an agreement does not accord with 'business common sense', the courts may depart from the language of the contract.

Which of the following statements is true?

Which is the most accurate description of the courts' general approach to interpreting contracts in English law?

Which of the following statements is true?

Barney is a trainee chef. His contract requires him to be available 'from 5pm to 10pm and any other hours that may be required'. After working two 90 hour weeks in a row, he refuses to stay late on Monday and instead returns home to sleep. When his employer argues that he is in breach of contract, Barney argues that there is an implied term in law limiting working hours on health and safety grounds. Is Barney right?

Colin is visiting London for the weekend and concludes a number of contracts. In which of the following cases has the term been successfully incorporated?

Recent Supreme Court decisions have restated the law relating to interpretation of contracts (Rainy Sky (2011); Arnold v Britton (2015) and Wood v Capita (2017)). Which of the following statements are true?

Jenny signs an employment contract with Bigwigs circus to work as an elephant trainer. A few weeks later, Bigwigs circus is embroiled in an animal abuse scandal for gross mistreatment of its performing animals. The circus is shut down and Jenny cannot find work anywhere else in the circus world. Jenny can sue Bigwigs for her loss of employment prospects.

Which of the following statements is true?