Exclusion clauseIncorporationCourt of Appeal (England)

Olley v Marlborough Court Ltd

[1949] 1 King's Bench 53219492 min read
The case in brief30-second read
Facts
Mrs Olley was a resident at the Marlborough Court Hotel. She checked in and paid at the reception desk (contract formed here) In the hotel bedroom, on the back of the door, a notice stated: "The proprietors will not hold themselves responsible for articles lost or stolen unless handed to the manageress for safe custody"
Issue
Whether an exclusion clause displayed in a hotel bedroom, seen only after the guest has contracted at reception, is incorporated into the contract?
Held
The Court of Appeal held for Mrs Olley: the exclusion clause was not part of the contract.
Principle
An exclusion clause displayed after the contract is formed (e.g., a notice inside a hotel room seen only after check-in at reception) cannot be incorporated into the contract; terms must be brought to notice before or at the time of contracting.
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Facts

  • Mrs Olley was a resident at the Marlborough Court Hotel
  • She checked in and paid at the reception desk (contract formed here)
  • In the hotel bedroom, on the back of the door, a notice stated: "The proprietors will not hold themselves responsible for articles lost or stolen unless handed to the manageress for safe custody"
  • Mrs Olley's fur coat was stolen from her room
  • The hotel relied on the exclusion notice to avoid liability

Issue

  1. Whether an exclusion clause displayed in a hotel bedroom, seen only after the guest has contracted at reception, is incorporated into the contract?

Held

  • The Court of Appeal held for Mrs Olley: the exclusion clause was not part of the contract
  • The contract was concluded at the front desk when the guest booked and paid
  • The notice on the bedroom door was only encountered after contract formation
  • A term cannot be incorporated into a contract after the contract has already been made
  • The hotel was liable for the stolen coat

Ratio decidendi

For an exclusion clause to be incorporated into a contract, it must be brought to the attention of the other party before or at the time of contracting. A clause communicated after contract formation, however prominently displayed, cannot become a term of that contract. The question of timing is decisive: when was the contract formed, and was the clause known to the other party at that point?

Exam use

How to use it in an answer

  • Paired with Thornton v. Shoe Lane Parking [1971]: the two leading cases on timing of incorporation
  • Key principle: identify when the contract was formed → was the clause communicated before/at that moment?
  • Standard form contract questions: "A signs at the desk; the terms are on a board behind the counter" → depends on visibility/timing
  • Indian relevance: same principle applies in Indian contract law: terms must be communicated before acceptance; Section 7 ICA requires acceptance to be of all terms

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Citation

Olley v. Marlborough Court Ltd [1949] 1 King's Bench 532

Reported: [1949] 1 KB 532. This is an educational summary, not the judgment itself. Cite the reported version in professional or academic work.