J Spurling Ltd v Bradshaw [1956] EWCA Civ 3 (26 March 1956)

Warehousemen stored barrels of orange juice which were returned damaged. The customer counterclaimed for negligence, but the warehousemen relied on an exemption clause in their contract conditions. The Court of Appeal held the exemption clause was incorporated through course of dealing and protected against negligence, provided there was no breach of a fundamental term.

Facts

In June 1953, Mr Bradshaw purchased eight wooden casks of orange juice and sent them to J. Spurling Ltd, warehousemen, for storage. The warehousemen sent a ‘landing account’ receipt which stated on its face that conditions printed on the back covered the goods held. The back contained extensive exemption clauses including protection from liability for loss or damage ‘howsoever, whensoever, or wheresoever occasioned’ even when caused by negligence.

When the barrels were collected in April 1954, they were allegedly damaged – five barrels were empty without lids, one contained dirty water, and two were leaking badly. Mr Bradshaw did not complain until December 1954. When the warehousemen sued for unpaid charges of £61.12.6, Mr Bradshaw counterclaimed £180 for negligent storage.

Issues

Whether the exemption clause formed part of the contract

Mr Bradshaw admitted receiving many landing accounts before but had never read the conditions. The question was whether sufficient notice had been given of the terms.

Whether the exemption clause covered negligence

The clause purported to exempt liability even for negligence, but the question arose whether such wide clauses were enforceable.

Judgment

Lord Justice Denning

Lord Justice Denning held that exempting clauses are subject to an overriding proviso that they only apply when a party is carrying out their contract, not when deviating from it or committing a breach going to the root of the contract. He stated:

The essence of the contract by a warehouseman is that he will store the goods in the contractual place and deliver them on demand to the bailor or his order. If he stores them in a different place, or if he consumes or destroys them instead of storing them, or if he sells them, or delivers them without excuse to somebody else, he is guilty of a breach which goes to the root of the contract and he cannot rely on the exempting clause.

However, mere negligence without more does not constitute such a fundamental breach. On incorporation, Lord Justice Denning noted:

I quite agree that the more unreasonable a clause is, the greater the notice which must be given of it. Some clauses I have seen would need to be printed in red ink on the face of the document with a red hand pointing to it before the notice could be held to be sufficient.

The clause here was incorporated through the course of dealing and Mr Bradshaw’s conduct in continuing to pay warehouse rent without objection.

Lord Justice Morris

Lord Justice Morris agreed, emphasising that the pleaded case was solely about negligence in storage, not failure to deliver or breach of a fundamental term. The conditions were plainly indicated on the face of the document and were legible on the back.

Lord Justice Parker

Lord Justice Parker concurred, noting the clause was extremely wide but would apply provided there was no breach of a fundamental term akin to deviation. Since the goods were redelivered (albeit damaged) and the only allegation was negligence, the exemption clause applied.

Implications

This case established important principles regarding exemption clauses: first, the ‘red hand rule’ requiring greater notice for more unreasonable clauses; second, that exemption clauses can be incorporated through a course of dealing; and third, that such clauses only protect against negligence within the scope of the contract, not fundamental breaches. The case remains significant authority on the incorporation of terms and the limits of exemption clauses.

Verdict: Appeal dismissed. The warehousemen’s exemption clause was held to be part of the contract and effective to protect them from liability for negligence in storing the goods, as there was no breach of a fundamental term.

Source: J Spurling Ltd v Bradshaw [1956] EWCA Civ 3 (26 March 1956)