Henderson v Stevenson (1875) LR 2 Sc & Div 470
Bench – Lord Cairns LC, Lord Chelmsford, Lord Hatherley and Lord O’Hagan
Delivered on June 1, 1875
Facts:
Henderson purchased a steamer ticket for travel from Dublin to Whitehaven. The front side of the ticket merely displayed the names of the places of departure and destination. On the reverse side of the ticket, there was an exclusion clause stating that the carrier would not be liable for loss, injury, or delay, even if caused by negligence of its employees.
The plaintiff did not examine the back side of the ticket and was unaware of the exclusion clause. During the voyage, due to negligence on the part of the defendant’s servants, the ship was wrecked and the plaintiff lost his luggage.
The plaintiff instituted proceedings against the steamship company seeking damages for the loss suffered. The defendants relied upon the exclusion clause printed on the back of the ticket and argued that they were exempt from liability.
The principal legal issues before the Court were:
i. Whether the plaintiff was bound by contractual terms printed on the reverse side of the ticket.
ii. Whether sufficient notice of the exclusion clause had been given to the plaintiff.
iii. Whether an exclusion clause not adequately communicated can form part of a contract.
Reasoning by Court:
Communication of Contractual Terms Is Essential: The Court emphasized that a party can only be bound by contractual terms that are properly communicated at or before the formation of the contract. A person cannot be presumed to have assented to conditions of which they had no reasonable notice.
Absence of Reasonable Notice: The Court observed that the front side of the ticket contained no indication whatsoever directing the passenger’s attention to conditions printed on the reverse side. The ticket appeared complete on its face and gave no warning that additional contractual terms existed elsewhere. Accordingly, the plaintiff had no reasonable opportunity to become aware of the exclusion clause.
Exclusion Clauses Must Be Clearly Brought to Notice: The Court warned that it would be dangerous to hold parties bound by undisclosed terms merely because they were printed somewhere on a document. The Court stated that contractual assent cannot be inferred where the relevant conditions were not effectively communicated to the other party. Therefore, the exclusion clause could not form part of the contract between the parties.
The Court held that: A party is not bound by contractual terms that are not reasonably communicated; An exclusion clause printed on the back of a ticket does not bind the passenger unless sufficient notice is given; The ticket must clearly indicate the existence of such conditions; and The steamship company remained liable for the plaintiff’s loss caused by negligence.