Olley v Marlborough Court Ltd [1949] 1 KB 532

Facts

• Mrs. Olley checked into the Marlborough Court Hotel, registering and paying for a week’s accommodation at the reception desk.
• After completing check-in and entering her assigned room, Mrs. Olley saw a notice on the back of the door stating, "The proprietors will not hold themselves responsible for articles lost or stolen unless handed to the manageress for safe custody."
• During her stay, a stranger entered her room and stole several items, including a mink coat.
• Mrs. Olley claimed the hotel was liable for the loss, alleging breach of contract and negligence.
• The hotel argued reliance on the notice in the bedroom as an exclusion clause to avoid liability.

Issues

1. Whether the notice displayed inside the hotel room, after the formation of the contract at reception, effectively excluded the hotel's liability for stolen guest property.
2. Whether contractual terms can be incorporated by notice after the contract has already been formed.

Decision

• The Court of Appeal found in favour of Mrs. Olley, holding the contract was formed at the reception desk before she saw the notice in her room.
• The exclusion clause displayed in the room was not incorporated into the contract as it was only brought to Mrs. Olley’s attention after the contract was made.
• The hotel remained liable for the loss due to their failure to exercise reasonable care.
• The court reaffirmed that for a term to be incorporated by notice, it must be brought to the other party’s attention before or at the time of contract formation.

Legal Principles

• Terms, especially exclusion or limitation clauses, must be notified to the contracting party before or at the time the contract is formed to be incorporated.
• Notices or documents containing terms presented after contract formation are ineffective to incorporate new terms.
• A consistent and regular course of dealing or an explicit signature may also incorporate terms, but timing remains essential for notices.
• Precedent distinctions: L'Estrange v Graucob highlights the signature rule for incorporation; Parker v South Eastern Railway and British Crane Hire v Ipswich Plant Hire demonstrate requirements for reasonable notice and regular dealings; Hollier v Rambler Motors and McCutcheon v MacBrayne stress the need for consistency in previous dealings.

Conclusion

Olley v Marlborough Court Ltd established that exclusion clauses must be brought to the notice of the party before or at the time of the contract’s formation to be effective; terms introduced only after formation do not bind the parties, reinforcing the importance of clarity and proper procedure in contracting.