Case name & citation: Olley v Marlborough Court, Ltd. [(1949) 1 K.B. 532]
Jurisdiction: King’s Bench Division
The bench of judges: Bucknill, Singleton and Denning L.JJ.
What is the case about?
Olley v Marlborough Court is a famous case that discusses the effectiveness of the terms and conditions in a contract and more specifically, the time the notice of a term must be given.
Facts of the case (Olley v Marlborough Court)
Mrs. Olley was a guest at the defendant’s hotel, checking in and paying for her room at reception. She hired the room for a week. On reaching the room, she found that posted on one of the walls (on the back of the hotel door) was the following notice:
‘The proprietors will not hold themselves responsible for articles lost or stolen unless handed to the manageress for safe custody.’
During her stay, she closed the self-locking door of the room and handed over the key to the reception desk. While she was out, the key was taken and some of her items were stolen.
Hence, she sued the hotel on finding that her belongings were stolen from the room. She contended that the hotel failed to appropriately safeguard the keys to guest rooms. And that the failure to safeguard the keys as well as her property in the room amounted to a breach of contract.
In reply, the hotel tried to invoke the exemption clause on the back of the hotel door to defend itself. The hotel argued that they were protected by the exemption notice as it disclaimed the owners’ liability for damage, loss, or theft of articles.
The notice was prominently displayed in the rooms, and the exemption clause clearly excluded the hotel from any obligation for stolen items. The hotel also claimed that Olley had been irresponsible by leaving her key on the reception desk.
Would the exemption clause be valid of which there was no mention at the time the contract was made (at the reception)?
Can the hotel owner be held liable?
Judgement in ‘Olley v Marlborough Court’
It was decided that because the contract was executed when the guest checked in at reception, the terms on the back of the door arrived too late and were not part of the agreement. Hence, the owner of the hotel was held liable. The notice of the exemption clause was not a part of the contract since it came to the knowledge of the client after the contract had been entered into.
Thus, Mrs. Olley was successful in the claim and recovered the cost of her stolen items.
The essence of the Case
The contract between the hotel owners and the plaintiff was in the nature of a standard form contract. When a large number of contracts have got to be executed by a party, then for the sake of convenience and from a practical point of view, a standard form of the contract may be used numerous times. Such a contract with standard terms is drafted by one party and it is entered with numerous persons on the same terms. These contracts are in the form of documents containing printed conditions.
Now, one of the essential rules in a standard-form contract is that notice of a term, if any, should be contemporaneous with the contract.
It should go without saying that a statement can only be included in a contract as a term if it is given either at the time the contract is made or prior to it. Afterward, it is too late since it would be unfair to impose terms, without first engaging in negotiation, on someone who has already entered a contract.
Therefore, if a party to the contract wants to have an exemption from liability, then he must give a notice about such exemption while the contract is being entered into and not thereafter. If the notice is given after the contract has been concluded, the exemption clause will be ineffective.
In the given case, by the time the client had seen the notice disclaiming the owners’ liability, the contract had already been entered. Hence, it did not form part of the contract. In general, all the essential terms and conditions of a contract shall be effective only if there are brought to the notice of the parties before or at the time of entering the contract.
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