Hollier v Rambler Motors (A.M.C.) Ltd. [1971] EWCA Civ 12 (19 November 1971)

A customer's car was damaged by fire due to a garage's negligence. The garage sought to rely on an exclusion clause from previous invoices. The court held that three or four transactions over five years were insufficient to incorporate the term.

Facts

The plaintiff, Mr Walter Hollier, a private consumer, had his car repaired at the defendants’ garage, Rambler Motors (A.M.C.) Ltd, on three or four occasions over a period of five years. On at least two of these prior occasions, he had signed an invoice form which contained a clause stating: “The company is not responsible for damage caused by fire to customers’ cars on the premises.” On the occasion in question, the contract was made orally over the telephone and no form was signed. While the car was at the garage, a fire broke out due to the defendants’ negligence (faulty electrical wiring), causing significant damage to the car. The plaintiff sued for damages. The defendants sought to rely on the exclusion clause, arguing it had been incorporated into the oral contract by a consistent course of dealing.

Issues

The Court of Appeal had to determine two key legal issues:
1. Was the exclusion clause incorporated into the oral contract through a previous course of dealing between the parties?
2. If the clause was incorporated, was its wording sufficiently clear and unambiguous to exclude the defendants’ liability for a fire caused by their own negligence?

Judgment

The Court of Appeal unanimously dismissed the defendants’ appeal, upholding the trial judge’s decision in favour of the plaintiff. The judges held that the clause was not incorporated into the contract, and even if it had been, its wording was not effective to exclude liability for negligence.

Incorporation by Course of Dealing

The court concluded that the previous dealings were not frequent or consistent enough to establish that the plaintiff had agreed to be bound by the term. Salmon L.J. distinguished the case from commercial contexts where parties regularly transact on standard terms.

“I do not think that the course of dealing in the present case comes anywhere near to being sufficient to displace that prima facie rule… Three or four occasions in the course of five years is, I think, a slender basis on which to ground a finding that the plaintiff must be bound by a condition which he did not know of and which in any event he had never been given any opportunity of reading.” – per Salmon L.J.

The court viewed the signing of a form on previous occasions as insufficient to create an assumption that the same terms applied to a subsequent oral contract, particularly for a consumer.

Construction of the Exclusion Clause

The court also analysed the clause under the principle of contra proferentem, which states that any ambiguity in an exclusion clause will be construed against the party seeking to rely on it. The judges reasoned that the clause was not clear enough to exclude liability for negligence. The words “not responsible for damage caused by fire” could reasonably be interpreted as referring to fire damage for which the garage was not otherwise liable (i.e., an accidental fire not caused by their negligence). For a clause to exclude liability for negligence, it must use express language or words whose meaning is inescapably clear.

“What is contemplated by a condition of this kind is that the garage shall not be liable for a fire which occurs without their negligence. It is not, in my judgment, to be supposed that the garage is representing to the customer: ‘We are so negligent that we may well set your car on fire, and if we do, we are not going to be responsible’.” – per Salmon L.J.

Latey J. added that the clause should be considered from the perspective of an ordinary person, who would likely understand it as a warning about the risk of non-negligent fire, for which the garage would not be liable anyway.

Implications

The decision in Hollier v Rambler Motors is a significant authority in contract law. Firstly, it establishes a high threshold for incorporating terms through a ‘course of dealing’, requiring dealings to be both regular and consistent. It highlights a judicial reluctance to bind a consumer to onerous terms they have not explicitly seen or agreed to for the specific transaction in question. Secondly, it provides a classic illustration of the application of the contra proferentem rule to exemption clauses. It reinforces the established principle that to exclude liability for negligence, a party must do so in the clearest possible terms. While predating the Unfair Contract Terms Act 1977, the case demonstrates the common law’s protective stance towards consumers faced with wide and ambiguous exclusion clauses.

Verdict: The appeal was dismissed with costs.

Source: Hollier v Rambler Motors (A.M.C.) Ltd. [1971] EWCA Civ 12 (19 November 1971)