Answer To Nottcester Arts Centre Exclusion Clause

Answer to the Nottcester Arts Centre Scenario on page 34 of the Law Materials

The clause which Nottcester Arts Centre is intending to print on the tickets for the firework display is an exclusion clause. If the organisation of the firework display was negligent, for example in the ignition of the fireworks or in managing the crowds, and some spectators were injured or suffered loss or damage to their possessions the Centre would be liable. The Arts Centre wishes to exclude its liability if such events occurred. In order to be valid the exclusion clause must be incorporated in the contract and the wording must cover precisely the event that has happened. It must also be regarded as fair under the Unfair Contract Terms Act 1977 and the Unfair Terms in Consumer Contract Regulations 1999. To be incorporated in the contract the spectators must have notice of the clause before or at the time the contract is formed. The clause must be one of the terms of the offer that was accepted by the spectator. If the only notice of the clause was the printing on the ticket it is likely that the ticket would be issued after the contract has been formed and so would be too late (Olley v Marlborough Court Hotel [1949]). In general exclusion clauses printed on tickets have not been upheld by the courts as, by virtue of Chapelton v Barry UDC [1940], tickets are regarded as merely receipts and not contractual documents on which the spectators would expect to find contractual terms. It is possible for a clause to be incorporated by a “course of dealings” (Spurling v Bradshaw [1956]): that the spectators had attended many previous firework displays run by the Arts Centre and had notice of the clause previously. For some spectators it will be their first firework display and in any case the court held in Hollier v Rambler Motors [1972] that three or four occasions over a five year period was not a sufficient “course of dealings”. It would not be possible for the Arts Centre to argue that the clause had been incorporated in this way. To be validly incorporated in the contract between the Arts Centre and the spectators the clause would have to be brought to the attention of the spectators before purchasing a ticket. This could be done either by reference to the terms and conditions if tickets are purchased on the web (and arguably should be given particular prominence as the clause would be regarded as an onerous clause (Interfoto Picture Library v Stiletto Visual Programmes [1989]). If the tickets were purchased at a box office then a notice should be prominently displayed with the exclusion clause and if they were purchased on the telephone then the operator should draw the buyer’s attention to the clause. If the wording is ambiguous the courts will interpret the clause against the party hoping to rely on it, in this case the Nottcester Arts Centre. This is known as the contra proferentem rule. In Hollier v Rambler Motors [1972] the Court of Appeal held that clear words were needed if the Garage wished to exclude liability for its own negligence. The Arts Centre had not made it clear whether it wishes to

exclude liability for its own negligence and so the courts would probably not uphold the clause because of this lack of clarity. To overcome this the clause would have to be redrafted to read “....Nottcester Arts Centre will not be responsible for any death, personal injury or loss to spectators attending the display, whether or not caused by the negligence of the Arts Centre.”

The Unfair Contract Terms Act 1977 only applies where the party seeking to rely on the exclusion clause is a business. The Act does not define a business but by virtue of s.14 widens the usual definition of a business as an organisation aiming to make a profit , to include the activities of local and public authorities. The Arts Centre receives grants from the local authority so may be regarded as an “activity of the local authority”. It the Act applies s.2(1) lays down that death or personal injury caused by the negligence of the Arts Centre cannot be excluded. The Arts Centre will, therefore, have to reword the clause so that there is no attempt made to exclude liability for its own negligence if it causes personal injury or death. It is possible to exclude liability for other loss or damage caused by negligence provided it is reasonable in the circumstances (s2(2)). When looking at reasonableness the courts consider the guidelines in Schedule 2 of the Act. A relevant guideline is to look at the bargaining position of the parties. The Arts Centre is in the stronger bargaining position as it would impose the terms. It would not be open to the spectators to negotiate the terms and so the spectators are in a weak bargaining position. The amount of notice given is another guideline, if the Centre continued to merely rely on a clause on the ticket this would not be regarded as sufficient notice (see the discussion of incorporation above). It would be possible for the Arts Centre to insure against liability and running a firework display is not an intrinsically difficult task and so it is likely that excluding liability for other loss or damage caused by negligence would not be reasonable. The Unfair Terms in Consumer Contract Regulations 1999 would apply if the Arts Centre is regarded as running a business, the spectators would normally be “consumers”, defined in Reg 3(1) as natural persons (i.e. not companies) who are not making the contract in the course of a business. To be upheld the clause must not cause an imbalance in the parties’ rights (Reg 5(1)) this exclusion clause does cause such an imbalance (see the discussion above on bargaining position under the Act). Also the Regulations lay down that the language used in the clause must be clear (Reg7(1)). If the clause is unfair under the Regulations it will not be upheld although the rest of the contract remains valid. Nottcester Arts Centre should be advised to reword the clause along the following lines. “ Nottcester Arts Centre will do what is reasonable to ensure the safety of all the spectators and their possessions. If any spectators suffer any personal injury or loss or damage to their possessions, caused by the negligence of Nottcester Arts Centre, a reasonable sum in compensation will be paid. Nottcester Arts Centre cannot be liable for any personal injury to spectators or

loss or damage to spectators’ possessions at this Firework Display that is not caused by the Centre’s negligence” Words 1,120