Tilden Rent-A-Car Co v Clendenning

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Tilden Rent-A-Car Co. v. Clendenning (1978), 83 DLR (3d) 400 is a leading Canadian contract law decision from the Court of Appeal for Ontario on standard form contracts. The Court held that a party can only be bound to a signed standard form contract when it is reasonable to believe that they consented to the terms. [1]

Canadian contract law has its foundation in the English legal tradition of the 19th and early 20th century. It remains largely rooted in the old English common law and equity. Individual provinces have codified many of the principles in a Sale of Goods Act, which was also modelled on early English versions. Quebec, being a civil law jurisdiction, does not have contract law, but rather has its own law of obligations that is codified in the Quebec Civil Code.

The Court of Appeal for Ontario is an appellate court in Ontario that is based at historic Osgoode Hall in downtown Toronto.

Standard form contract type of contract between two parties

A standard form contract is a contract between two parties, where the terms and conditions of the contract are set by one of the parties, and the other party has little or no ability to negotiate more favorable terms and is thus placed in a "take it or leave it" position.

Contents

Background

Clendenning rented a car from Tilden Rent-A-Car, a Canadian car rental company. He signed the rental agreement which contained an exclusion clause denying coverage for accidents that occur if the driver had consumed any alcohol. Later, Clendenning hit a pole after having consumed alcohol. He pleaded guilty to impaired driving and tried to collect from the insurance policy to pay for the damages of his accident.

Tilden Rent-a-Car, later known as Tilden InterRent, was a Canadian car rental company that was founded by Sam Tilden. Its fleet was sold by the Tilden family to National Car Rental of the United States in June 1996.

Exclusion clause

An exclusion clause is a term in a contract that seeks to restrict the rights of the parties to the contract.

Opinion of the Court

Justice Charles Dubin, for the court, held that Clendenning could collect from the insurance. Dubin observed that:

Charles Leonard Dubin, was a Canadian lawyer and former Chief Justice of Ontario. He is best known for leading the Dubin Inquiry into the use of steroids by athletes.

In modern commercial practice, many standard form printed documents are signed without being read or understood. In many cases the parties seeking to rely upon the terms of the contract know or ought to know that the signature of a party to the contract does not represent the true intention of the signer, and that the party signing is unaware of the stringent and onerous provisions which the standard form contains. Under such circumstances, I am of the opinion that the party seeking to rely on such terms should not be able to do so in the absence of first having taken reasonable measures to draw such terms to the attention of the other party, and, in the absence of such reasonable measures, it is not necessary for the party denying knowledge of such terms to prove either fraud, misrepresentation or non est factum. [2]

Normally, a customer would have time to consider the whole agreement. But in this particular situation, renters are typically in a rush and do not normally have a chance to read the terms of the agreement. The judge observed that the rental system is designed to be speedy and, therefore, lengthy and onerous terms cannot assumed to be assented to.

See also

Notes

  1. 1978 CanLII 1446
  2. p. 408-09

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