The only contractual liability that can be envisaged in the contractual relation between Alana and Masterpiece is a possible action of Alana against Masterpiece for damages. Approaching the question as to whether a possible action of Alana for damages against Masterpiece Ltd could be deemed successful, one has to look for suitable legal grounds to support such an action.
A.) Valid contract
The first legal question that arises as to a possible action of Alana for damages against Masterpiece is to know whether a legally-enforceable contract has been concluded between Alana and Masterpiece Transportations. Since contractual liability is based on the defendant`s failure to perform an undertaking or promise, a promise is one of the essential elements of contractual liability.
The fact that Masterpiece Transportations is a company is not a problem as to the validity of the contract, since companies are considered legal entities.
Four elements are to be examined: agreement, certainty, contractual intention and consideration.
An offer is the expression of willingness to contract on certain terms, made with the intention that it shall become binding as soon as it is accepted by the person to whom it is addressed.
The offer could be seen in the advertisement in the Yellow Pages.
An offer, however, must be distinguished from an invitation to treat. Since Master Piece Transport Limited presumably did not want to be bound by its advertisement in the Yellow Pages as soon as accepted by any reader of the advertisement, the advertisement is to be regarded as a mere invitation to treat.
The telephone call of Alana cannot be seen as offer either, since she does not express on which terms she wants to contract. As a mere inquiry,it has to be regarded as a preliminary communication.
The offer has to be seen in the agreement of Masterpiece over the telephone to carry the works for their normal fee subject to their usual condictions.
An acceptance is an absolute and unconditional assent to the terms proposed by the offeror.
From the point of view of an objective third party in the position of Masterpiece, the fact that Alana makes no further inquiries on fees and conditions can be understood as an absolute and unconditional assent to the terms proposed by Masterpiece Ltd.
Alana and Masterpiece Ltd have expressed their agreement in sufficiently certain form. The terms of their agreement are not ambiguous or leave important elements open.
The fact that Masterpiece referres to its normal fee and usual conditions does not cause uncertainty, since the normal fees and usual conditions are objectively certain. Absolute certainty of all the elements of the contract is not required.
3.) Intention to create legal relations
Business relations as the contract between Alana and Materpiece Ltd are presumably concluded with the intention to create legal relations.
Not having been concluded by deed, the contract in question is a simple contract. It is valid only if supported by consideration: The consideration can be defined as the price of the promise (Dunlop Pneumatic Lyre Company. Ltd. V. Selfridge and Co. Ltd.). More pricesely, a consideration means, that each party must bring something of value to the agreement. Some return must have been asked for by the offeror from the accepting offeree in return for his promise.
The consideration is to be seen in the agreement on the normal fee. Alana promises in return to the transportation of her goods to pay the fee requested.
The agreement between Alana and Masterpiece Ltd contains all necessary elements.
B.) Vitiating Factors
The agreement is not void or voidable because of any procedural limitations.
A contract has been concluded with the content that Masterpiece Ltd is obliged to transport the goods of Alana and Alana has to pay the normal fees and respect the usual conditions.
The goods did not arrive in London. Eight Hours after the loading of the goods the vehicle is found abandoned and the works have disappeared.
The question is to know whether this failure of executing the contractual obligation from the side of Masterpiece constitutes a breach of the concluded contract.
According to Section 13 in Part II of the Supply of Goods and Services Act 1982, in a contract for the supply of service where the supplier is acting in the course of a business, there is an implied term that the supplier will carry out the service with reasonable care and skill.
It can be doubted if this has presently been the case.
The given facts only allow speculation in what has happened to the works.
Maybe the vehicle has been hijacked. In that case Masterpiece can excuse itself. There won't be any liability in that case. But Masterpiece bears the onus of evidence.
Maybe the employees have abandoned the vehicle and stolen the works.
In that case, it is to examine whether Masterpiece is responsible for the acting of its driver under the doctrine of vicarious liability. The employer is under certain circumstances liable for the wrongful acts committed by his employees in the course of their employement.
Presumably, the driver and the people loading the pictures were employees of Masterpiece.
The wrongful act of abandoning the vehicle and taking away the pictures has been committed in the course of their employment.If the wrongful act occurred while the employees were going about their normal work and if it was a careless or wrongful means of performing that work, the employer will be liable. But there is a problem to hold the employer liable where the accident arises not so much out of a careless manner of performing the job, but out of careless behaviour committed at the same time as doing the job. The question is to know whether the behaviour of the employees falls outside the scope of employment. Where a bus conductor assaulted a passenger on his bus, it was held that this was outside the course of his employment. (Keppel Bus Co. Ltd. V. Ahmad). Since a criminal act commited by an employee in course of his work always has to be regarded as outside the scope of employment, Masterpiece is not responsible for the disappearance of the works through the doctrine of vicarious liability.
But one could argue that -apart from the doctrine of vicarious liability- the fact that Masterpiece employed unreliable people violates the term implied by statute that the supplier would carry out the service with reasonable care and skill (Section 13 in Part II of the Supply of Goods and Services Act 1982).
If the works have disappeared by an action of the employees, Masterpiece can be held responsible for it and there is breach of the implied term to carry out the service with reasonable care and skill.
C.) The exclusion clause as substantial limitation to the validity of the contract
Another legal question as to the contractual liabilities of the parties to the contract is to know whether the clause " we accept no responsibility whatsoever beyond a maximum liability of half the carriage fees " is valid.
This clause seeks to reduce the responsibility of Masterpiece Ltd towards Alana for the breach of the obligations arising from their relationship. If this clause is a valid part of the contract, the liability of Masterpice is limited. A clause with that purpose has to be named exclusion clause and follows a special regime of control according to both common law and statute law.
1.) Incorporation of the clause
First, it has to be examined if the exclusion clause written on the receipt has become part of the contract.
Initially the contract between Alana and Masterpiece Ltd has been concluded orally. The written term containing the exclusion clause arrived later with the "contract receipt" handed out to Alana at the moment of the loading of the pictures to transport.
Therefore, the question as to whether or not that clause has ideed been incorporated into the contract arises.
As to the incorporation of the exclusion clause, first of all notice of the terms must be given either before the contract is made or at the time of contacting.
In our case , as examined above, the contract was concluded at the moment of the telephone call, when Alana did not make further inquiries an therewith accepted the normal fees and the general conditions of Masterpiece Ltd. At the time when the contract was concluded via telephone, the existence of the exclusion term had not directly been brought to the attention of Alana. According to the case Olley v Marlborough Court Hotel Ltd., notice must be given at the time when the contract is concluded.
It has to be examined whether the reference of Masterpiece Ltd to the usual conditions at the moment of the conclusion of a contract is enough to satisfy the requirement of the notice of the term in question. This very special case must be distinguished from the rule that notice of the exlcusion clause must be given before or at the moment of the formation of the contract: It is nowadays very common to conclude contracts over the telephone. To make the conclusion of such contracts faster and more convenient, it is common and even necessary to refer to the normal conditions. It is not against good faith not to expressedly refer to the exclusion clause since exclusion clauses are a very common habit for transportation enterprises.
Alana could have made inquiries on the usual conditions in question.
Therefore, the reference to the usual conditions over the telephone has to be regarded as satisfactory notice of the exclusion.
b.) Contractual document
Masterpiece Ltd must show that the clause in question was contained in or referred to on a document which was plainly intended to have contractual effect. A document containing exclusion clauses is not binding if the reasonable person would have assumend that that document was not contractual in nature.
The question is to know as to whether Alana could assume that the "contract receipt" was not contractual in nature.
In favor of the contractual nature of the document one can find the argument that the document is entitled contract receipt. On the other hand the word "receipt" implies, that the paper contains only the confirmation of a transaction already concluded. In the case Chapelton v. Barry U.D.C., the exclusion clause printed on the back of the receipt which had been given to the claiment when he paid the fee to hire a deckchair was not held incorporated into the contract because the receipt was not a contractual document.
But in our case things are different:A reasonable person in the place of Alana could not assume that the document was not contractual in nature because Masterpiece had referred to its usual conditions on the phone. Since these conditions had not been specified yet, Alana could attend to get a specification of these conditions at the moment of the loading of the pictures.
c.) Overriding of exclusion clause by the driver ?
Alana might argue against the exclusion clause in objecting that the content of the clause had been overridden by an inconsistent oral undertaking or other representation. The driver, an agent of Masterpiece Ltd, told Alana when she asked him about the content of the document, , that he was only the driver and that the document was probably just a warning about the effects of dampness on documents.
Here, a reasonable person could not trust the words of the driver who admits not to know what exactly the document contains. Alana would have had to read the document herself. It is not reasonable to trust someone who admits not knowing the content. What the driver said on the content of the document was a mere speculation and Alana could have noticed that.
The exclusion clause has indeed been incorporated into the contract.
2.) Control of the clause as to its content
According to the wording of the exclusion clause, the liability of Masterpiece Ltd for breach of contract is limited on half of the carriage fee.
This may seem very unfair, especially considering the fact that Masterpiece is specialized in the transportation of Art works, often small objects with a very high value.
Therefore the exclusion clause has to undergo a control as to its content. The validity of such clauses is now controlled by the Unfair Contract Terms Act 1977 and the Unfair Termis in Consumer Contracts Regulations 1994, that have superseded the Common Law Tests applicable before the enactment of these legislative rules.