Chapter 7 Guidance on questions in the book

Question

Gerald’s Gardens Ltd (GG) is a small garden landscaping business owned and run by Gerald. GG is commissioned to do a landscaping job that requires a lot of earth to be moved, so must hire a digger from Hodulike Ltd, a tool-hire company with which GG has an account and has dealt before. Gerald visits Hodulike’s showroom and selects a suitable digger, which is then reserved on the computer by Hodulike’s receptionist for hire by GG for three days from the following Monday, for a price of £800. No terms and conditions are drawn to Gerald’s attention, but on the wall of the showroom there is a large notice displaying Hodulike’s ‘Standard conditions of hire’, some of which are printed in red, which Gerald does not see. The following Monday the digger is delivered to GG’s premises and Gerald signs a receipt, which has a copy of Hodulike’s standard conditions of hire printed on the back. That night, the digger is stolen from GG’s premises and cannot be traced. Gerald has just been told that one of the terms of the standard conditions of hire is as follows: ‘Hirer must insure equipment for full value’ and that Hodulike are demanding £20,000 as the replacement cost of the digger. Gerald is furious, since he is adamant that he did not agree to this clause. Advise GG.

Answer guidance

Remember that you are asked to advise GG, which is a limited company and thus a separate legal person from Gerald, although for most purposes the two can be treated as synonymous. GG wishes to resist Hodulike’s demand for the replacement cost of the digger, which (assuming that there is otherwise no express or implied term to that effect) means demonstrating that the term  requiring him to insure for the full value of the equipment was not incorporated into GG’s contract of hire. There are a number of issues to consider. First, when was the contract made? If, as seems likely, it was made when Gerald visited the showroom and made the reservation (after all, you would expect GG to have a contractual right to complain if Hodulike failed to deliver the digger when promised), then nothing that happens after that moment can add any further terms. In particular, that would rule out incorporation of terms by means of Gerald’s signature on the receipt (Hodulike might attempt to run an argument that the receipt constituted an offer to vary the existing contract, adding new terms and conditions, but this is highly unlikely to succeed). In any event, a receipt is also unlikely to be the sort of document where you might reasonably be expected to find terms and conditions.

So, assuming the contract was made when Gerald visited the showroom, you need to consider whether GG’s previous dealings with Hodulike suffice to incorporate the term by virtue of a prior course of dealing? If not, consider whether Hodulike has taken reasonable steps to bring the term to GG’s notice by means of the large notice (and whether the disputed term is one of those printed in red).

Notice finally that the disputed term is not an exclusion clause and thus the regime in the Unfair Contract Terms Act discussed in chapter 8 is of no assistance to GG. Nor is the regime in the Consumer Rights Act 2015, because GG is a company not a natural person.