McCutcheon v David Macbrayne Ltd [1964] 1 W.L.R. 125
Facts
McCutcheon arranged through his brother-in-law for David Macbrayne to carry his car by sea. The vessel sank through negligent navigation and the car was lost. The carrier relied on conditions excluding liability. Its usual arrangements involved receipts and risk notes, but no risk note was signed for this shipment and the contract was made orally without reference to the conditions. In previous dealings, documents had sometimes been signed and sometimes omitted. Neither McCutcheon nor his brother-in-law knew the specific conditions relied on. The issue was whether that history nevertheless incorporated them.
Legal Issue
Were the carrier's exclusion conditions incorporated through previous dealings despite the oral agreement and absence of a signed risk note for this shipment?
Held
The House of Lords held that the exclusion conditions had not been incorporated into this carriage contract. No risk note containing the conditions was signed for the shipment in question, and the oral agreement did not refer to them. Previous dealings were inconsistent: documents had sometimes been signed and sometimes not. The necessary basis for treating those conditions as part of the new bargain was therefore absent. General awareness that the carrier used conditions did not fill that gap on these facts. The decision does not require actual reading of every term in every course-of-dealing case; it requires a sufficient and consistent contractual basis for incorporation rather than assumptions drawn from occasional earlier paperwork.
⭐ Legal Principle
Terms may be incorporated through an established course of dealing, but intermittent and inconsistent use of documents may fail to establish that basis. General awareness of a business's conditions does not automatically insert them into a later oral contract which does not refer to them.
Significance
McCutcheon shows why course of dealing is an evidential route to incorporation, not a blanket defence for repeat suppliers. Compare regular and consistent dealings and the separate significance of a signed contractual document. The Scottish appeal is routinely studied in the general law of contract. In a problem, identify the parties' actual history, the documents used and whether the particular contract invoked the alleged conditions. Do not confuse inability to prove incorporation with a conclusion that the wording would have been invalid if properly incorporated.
Common exam questions about this case
Why did earlier transactions not incorporate the conditions?
The practice was inconsistent: risk notes had not been used on every occasion, and none was signed for this shipment. That history did not establish a sufficiently settled basis for treating the disputed conditions as part of the oral agreement. Repetition alone was not enough.
Was actual reading of all earlier conditions required in every case?
The decision should not be stated that broadly. Incorporation can rest on an established contractual practice and objective knowledge. The problem here was the combination of inconsistent dealings and lack of a sufficient basis for assent to the particular conditions, not a universal requirement to prove careful reading.
How does this differ from the signature rule?
A signature on a contractual document can ordinarily incorporate its terms despite failure to read them. Here no risk note was signed for the relevant shipment, so the carrier needed another route. Earlier signatures did not automatically carry every term forward into a differently made contract.