The trouble with washing your dirty linen in public

Dear Legal Mind,

I recently discovered a laundromart in my neighbourhood and tried their services. Upon presenting my items, the receipt they issued me stated as follows: “If you do not pick your items 13 days after your laundry is ready, any missing item shall not be the responsibility of the laundry company”

The legal mind, what does this mean for me as a customer?

S. Bea Labone, Accra

Response:

S. Bea, as you are aware, businesses primarily focus on generating profits. To safeguard against potential losses, a business must have some flexibility. A prime example is the concept of separate legal personality which emerged in the 18th century to protect shareholder investments. This principle allows individuals and corporate entities to invest in companies with the assurance that their investments are secured(Refer to Salomon v Salomon and Morkor v Kuma). Similarly exclusion clauses, also known as exemption clauses, have been established to assist corporate and commercial entities limit their liability to customers in their operations.

Exclusion clauses are contractual terms designed to allow one party to evade or restrict legal liabilities. These contractual terms are vital in facilitating commercial activities and enable businesses to take calculated risks with greater confidence.

The general principle is that an exclusion clause will only be binding or enforceable if it has been properly incorporated into the contract and meets the test of construction.

There are three primary methods for incorporating an exclusionary clause:

1. Signature: If the exclusion clause is included in a signed contract, it is considered incorporated (see L’Estrange v E. Graucob Ltd [1934] 2 KB 394).

2. Notice: If a term appears in a document where contractual terms are typically found, and the parties are made aware of these terms before or at the time of contracting, the term will be incorporated (refer to Chapelton v Barry Urban District Council [1940] 1 KB 532).

3. Previous Course of Dealings: If there is a consistent pattern of dealings between two parties over time, the standard terms of the contract may be deemed incorporated, even without explicit incorporation/inclusion.

Test of Construction 

This refers to the ability of the exclusion clause to cover the loss which has occurred. As a general rule, an exclusion clause must only be construed on its natural and ordinary meaning, as per the case of George Mitchell (Chesterhall) Ltd v Finney Lock Seeds [1983] 2 AC 803. 

Alongside this rule, there are various devices of interpretation the courts use to ensure fairness, usually in the context of consumer and commercial relationships. Here are the various rules to remember:

• The courts will not infer a greater exclusion than that which is present in the exclusion clause.

• Exclusion clauses are interpreted ‘contra proferentum’.where a term of a contract is uncertain and ambiguous, the is to be construed against the party attempting to rely on the clause.

• Exclusion clauses will limit the scope of the clause to contractual matters.

• Limitation clauses will be construed more favourably.

• If the exclusion clause is inconsistent with an oral agreement, the clause will not apply.

It is almost important to add that there are other conditions that a party that seeks to rely on an exclusion clause must prove or satisfy the court in order to benefit under it. 

The first condition is that no excluding or limiting term will avail the party seeking its protection unless it has been brought adequately to the attention of the other party before the contract is made.

The Second condition, is that it is the law that a party in breach of a fundamental term of his contract with a third party will not be allowed to benefit from or resort to exclusion clauses: 

Third, an exclusion clause will not be operable and able to be relied upon if the person attempting to rely on the clause had induced the other party to enter the contract by misrepresenting the effect of the clause.

In your situation, the exclusion clause was on the front page of the receipt, being very conspicuous in a large and fine font. You (the customer) signed the receipt, and the signing was done at the time the contract for the laundry services was being entered into. The clause also broadly covered both damage and loss. 

The contents of the exclusion clause do not appear to be a breach of the fundamental term of the laundry contract and same had been adequately brought to your attention or to an average customer at the time the contract was made.

In the premises, the exclusion clause was properly incorporated both by signing and notice and will inure to the benefit of the laundry company, should any liability arise.