The decision in Olley v Marlborough Court Hotel is a leading authority in English contract law on the incorporation of exclusion clauses. It firmly establishes that an exclusion clause must be brought to the attention of the contracting party before or at the time the contract is formed; any attempt to introduce such a clause afterwards will generally fail. The case also deals with the interpretation of clauses seeking to exclude liability for negligence and reinforces the duties owed by innkeepers under statute and common law.
Facts of Olley v Marlborough Court Hotel Case
Mrs Olley was a guest at Marlborough Court Hotel, Lancaster Gate, London, where she had been residing on a long-stay basis. The usual practice for guests was to leave their room keys on a rack at the reception desk when going out. On the day in question, she followed this routine and left her key on the rack before leaving the premises.
Upon her return, she discovered that the key was missing. When she entered her room, she found that her fur coat had been stolen. A witness, Colonel Crerer, had observed a person entering her room and later emerging with a parcel approximately fifteen minutes later. The hotel porter, occupied with cleaning a bust of the Duke of Marlborough, had failed to notice this activity.
Inside Mrs Olley’s bedroom, behind a door leading to a washbasin, there was a notice stating:
“The proprietors will not hold themselves responsible for articles lost or stolen, unless handed to the manageress for safe custody.”
The hotel refused to compensate her for the loss, relying on this notice as an exclusion clause absolving them of liability. Mrs Olley argued that the clause had not been incorporated into the contract, as she had only seen it after entering the room—long after the contract had been concluded at the reception desk.
Procedural History
The case came before the Court of Appeal, where the judges—Denning LJ, Singleton LJ, and Bucknill LJ—had to determine whether the exclusion clause could be relied upon, whether the hotel had failed in its duty of care, and whether the wording of the clause was sufficient to exclude liability for negligence.
Legal Issues
The case raised several important issues:
- Incorporation of Exclusion Clauses Could the hotel rely on the notice in the bedroom to exclude liability, even though it was not brought to Mrs Olley’s attention before the contract was concluded?
- Duty of Care under Common Law and Statute Did the hotel fail to take reasonable care of the guest’s property, thereby breaching its obligations under the Innkeepers’ Liability Act 1863, section 1?
- Construction of the Exclusion Clause Even if incorporated, did the wording of the clause effectively exclude liability for negligence?
Arguments in Olley v Marlborough Court Hotel
For Mrs Olley
- The exclusion clause was not incorporated into the contract because the contract was formed at the reception desk when she paid for the accommodation. The notice was only visible after entering the room and therefore came too late.
- There was an implied term in the contract, and a statutory duty under the Innkeepers’ Liability Act, requiring the hotel to take reasonable care of her belongings. Leaving the keys unsecured amounted to negligence.
- The clause did not clearly exclude liability for negligence and should be construed narrowly.
For the Hotel
- The notice was clear, prominently displayed in the bedroom, and should be considered part of the contractual terms.
- The clause covered liability for stolen property and should absolve the hotel from responsibility, even if negligence was involved.
- Mrs Olley had been contributorily negligent by leaving her key on the rack at reception.
Olley v Marlborough Court Hotel Judgement
The Court of Appeal ruled in favour of Mrs Olley, holding that she was entitled to recover the full value of the stolen coat. The appeal was dismissed.
Reasoning of the Court in Olley v Marlborough Court Hotel
Incorporation of the Exclusion Clause
Denning LJ emphasised that for an exclusion clause to be binding, it must be brought to the other party’s attention before or at the time the contract is made. Three main methods were identified for incorporation:
- By a signed written agreement.
- By providing a written notice of the terms before or at the moment of contracting.
- By displaying a prominent public notice visible to the party at the time of contracting.
Notices placed in hotel bedrooms are generally ineffective for incorporation because they are typically only seen after the guest has already agreed to stay. Since the contract between Mrs Olley and the hotel was concluded at the reception desk, the bedroom notice could not be part of that contract.
Duty of Care and Negligence
The hotel had both a contractual duty and a statutory duty under the Innkeepers’ Liability Act 1863 to take reasonable care of guests’ property. By allowing the key to be left on a rack in a publicly accessible area without adequate supervision, the hotel failed in this duty. The theft was a foreseeable consequence of such lax security measures.
Interpretation of the Clause
Even if the clause had been successfully incorporated, it would still have failed to protect the hotel from liability for negligence. Courts construe exclusion clauses strictly, and if they are to exclude liability for negligence, the wording must be explicit. In Olley v Marlborough Court Hotel, the clause simply stated that the hotel would not be responsible for lost or stolen items unless handed in for safekeeping; it did not expressly exclude liability for negligence. Denning LJ observed that such wording could be construed as applying only to liability as an insurer, not as an exemption from the duty to exercise reasonable care.
Conclusion
Olley v Marlborough Court Hotel is a landmark decision in the area of exclusion clauses and contract formation. It clarifies that contractual terms must be presented before the agreement is finalised, and that courts will interpret exclusion clauses narrowly, especially when negligence is involved. The judgement also underscores the continuing importance of statutory duties, such as those imposed on innkeepers, which cannot be sidestepped through vague or belated disclaimers.
The case stands as a reminder that both timing and clarity are crucial in drafting contractual terms, and that any attempt to alter obligations after the fact will usually fail. For this reason, Olley v Marlborough Court Hotel remains a key authority taught in law schools and cited in cases involving exclusion clauses and the responsibilities of service providers.
