Parker v South Eastern Railway (1877) 2 CPD 416

Facts

• The claimant deposited a bag in the cloakroom of South Eastern Railway's station and received a ticket.
• The ticket displayed “see back” on its face; the reverse side contained conditions including a clause limiting liability for lost items to £10.
• The claimant’s bag was lost while in the railway’s care, and the claimant sought £24 in damages, reflecting the bag’s actual value.
• The defendant relied on the liability limitation on the ticket as a defense to any claim exceeding £10.
• At trial, the jury was directed to determine whether the claimant was actually aware of the condition or reasonably ought to have been aware.
• An appeal followed, questioning whether the trial judge correctly instructed the jury regarding actual versus reasonable notice.

Issues

1. Whether the limitation clause on the ticket was incorporated into the contract by provision of reasonable notice, irrespective of the claimant's actual knowledge.
2. Whether the trial judge erred by emphasizing the claimant's actual awareness, instead of whether reasonable steps were taken to notify the claimant of the conditions.

Decision

• The Court of Appeal held that the trial judge wrongly directed the jury by focusing on whether the claimant was actually aware of the condition.
• Mellish LJ established a three-part test for contractual notice, clarifying that reasonable notice is the operative standard, not actual knowledge.
• The case was remitted for a new trial, instructing that the jury should consider whether South Eastern Railway took steps reasonably sufficient to provide notice of the condition.
• Actual reading or understanding of the term by the claimant was held unnecessary for effective incorporation if reasonable notice was given.

Legal Principles

• A party seeking to rely on contractual terms, particularly exclusion or limitation clauses, must show that reasonable notice of the terms was provided to the other party before or at the time of contract formation.
• Reasonable notice requires that the terms are brought to the attention of a reasonable person; actual knowledge or reading is not required.
• The principle distinguishes between the effectiveness of notice with a human intermediary (as in this case) and situations where terms are provided only after contract formation.
• The standard is objective: it is sufficient if the notice would alert an average person, not if the particular claimant actually saw or understood it.
• The case draws distinctions from situations involving signed contracts (L’Estrange v Graucob), misrepresented clauses (Curtis v Chemical Cleaning Co), or where a ticket is deemed a mere receipt (Chappleton v Barry UDC).
• Incorporation by notice is separate from incorporation by a consistent course of dealings, as shown in related authorities.

Conclusion

Parker v South Eastern Railway (1877) 2 CPD 416 established that limitation or exclusion clauses are only incorporated into contracts where reasonable notice of the terms is provided prior to or at contract formation, marking a balance between contractual freedom and protecting parties from unexpected obligations, and forming a foundational rule in English contract law for incorporation by notice.