Explore the British Crane Hire Corporation Ltd v Ipswich Plant Hire Ltd [1975] case summary, crucial for understanding the incorporation of trade customs into contracts, essential for law students studying contract law.

  • In the case of British crane hire corporation ltd v Ipswich plant hire Ltd 1975 QB 303 it was found that certain customary trade practices can be deemed to be incorporated into contracts without express provision.

Facts of the Case British Crane Hire

  • A plant hire company (D), engaged in drainage and other engineering works on marsh land. They had arranged by telephone to hire a dragline crane from C.
  • The crane was delivered, and C subsequently sent a printed form setting out the conditions that D should be responsible for the recovery of the crane from soft ground and that D should be responsible for, and indemnify C against, all expenses arising out of the crane use.
  • D neither signed nor returned the form to C.
  • D gave C’s driver directions as to the route by which he should drive the crane over the marsh to the site but warned him of the need to use “naivmats”.
  • The driver did not wait for D to supply the “navigates” and drove the crane onto the marsh and subsequently sank into the marsh.
  • D managed to get the crane out.
  • On the following day, the crane sunk again into the marsh, although, on that second occasion, the driver was using “navigates” and had followed the instructions of D’s site agent.
  • C relied upon their conditions of hire and claimed the costs of the recovery of the crane on the second occasion and the D counterclaimed for the cost of recovery of the crane on the first occasion.
  • The judge, at first instance, held that the printed conditions were not incorporated into the oral contract but held that D was liable for the recovery of the crane on the second occasion on the ground inter alia, that there was an implied term into the contract that D would return the crane at the end of the hiring.
  • He allowed D’s counterclaim for the recovery of the crane on the first occasion on the ground that C’s driver had been negligent.

Issues in British Crane Hire 

  • The issues in this case relate to whether trade customs and practices can be incorporated into a contract where both parties are of equal bargaining power and experience in the trade.
  • Who could recover from the negligent acts of the driver?
  • Who could recover for the recovery of the crane on the second occasion?

Held by the Court of Appeal

  • On D’s appeal and C’s cross-appeal: both appeals dismissed

Lord Denning

  • Appeal dismissed as where the parties to a contract of hire were both in the trade and of equal bargaining power, the conditions habitually imposed in such contracts would be incorporated into the contract based on the common understanding of the parties that the usual conditions would apply.
  • The cross-appeal was also dismissed as the conditions were not wide enough to exempt C from responsibility for the negligence of their driver on the first occasion and in the absence of clear words exempting them form responsibility for their negligence, they were liable for the recovery of the crane on that occasion.
  • “From that evidence it is clear that both parties knew quite well that conditions were habitually imposed by the supplier of these machines: and both parties knew the substance of those conditions. In particular that if the crane sank in soft ground it was the hirer’s job to recover it: and that there was an indemnity clause. In these circumstances, I think the conditions on the form should be regarded as incorporated into the con- tract. I would not put it so much on the course of dealing, but rather on the common understanding which is to be derived from the conduct of the parties, namely, that the hiring was to be on the terms of the plaintiffs’ usual conditions” p311 B

Significance of the Case on the Development of the Law

The British Crane Hire Corporation Ltd v Ipswich Plant Hire Ltd [1975] decision has notably influenced contract law, particularly regarding the incorporation of standard terms and trade customs into oral agreements. This case’s implications are evident when examined alongside related precedents:

  1. Comparison with Parker v South Eastern Railway Company [1877]: This earlier case established that parties must be aware of standard terms for them to be binding. British Crane Hire elaborates on this by suggesting that within certain industries, standard terms can be assumed to be known and accepted by all parties involved due to common trade practices.
  2. Relation to Hollier v Rambler Motors [1972]: This case emphasized the need for regular dealings to establish the incorporation of unwritten terms. In contrast, British Crane Hire required only a single transaction, provided the terms are widely recognized in the relevant industry.
  3. Echoes of Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd [1989]: This later case highlighted the obligation to give sufficient notice of unusual or onerous terms. British Crane Hire indirectly addresses this by considering the fairness of assuming knowledge of standard terms without explicit discussion.

Exam Questions and Answers

Below you will find answers to questions that are most commonly asked based on this case.

What are the limits of incorporating standard terms based on industry customs without explicit agreement?

The limits of incorporating standard terms based on industry customs without explicit agreement are primarily dictated by the parties’ awareness and the pervasiveness of these customs within the sector. According to Peekay Intermark Ltd v Australia and New Zealand Banking Group Ltd [2006], terms can be incorporated if they are known to be universally accepted within a particular trade. However, for terms that are unusually onerous or unfamiliar, courts require explicit acceptance, as seen in Thornton v Shoe Lane Parking Ltd [1971], where unexpected terms were not enforced because they were not sufficiently highlighted prior to contract formation.

How do recent legal reforms affect the principles established in British Crane Hire?

Recent legal reforms, particularly the Consumer Rights Act 2015, strengthen the requirement that terms must be fair and transparent to be enforceable, primarily in consumer contracts. Although British Crane Hire dealt with commercial contracts, the principles of transparency and fairness are increasingly applied in commercial contexts as well, especially where there is a significant disparity in bargaining power. The Act mandates that terms, even if customary, must be prominently disclosed and fair, thus limiting the automatic incorporation of standard contractual terms.

In what situations might courts refuse to accept the incorporation of customary terms despite industry acceptance?

Courts might refuse the incorporation of customary terms despite industry acceptance if the terms are not adequately communicated or if they are unusually onerous. In Director General of Fair Trading v First National Bank plc [2001], the House of Lords held that terms must not only be legally valid but also fair and transparent. If industry standard terms are deemed excessively unfair to one party or if they contravene statutory protections, such as those outlined in the Unfair Contract Terms Act 1977, courts may refuse to enforce them, prioritizing consumer or lesser party protection.

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