Clendenning rented a car from Tilden Rent-A-Car. He signed the rental agreement which contained an exclusion clause denying coverage for accidents that occur if the driver had consumed any alcohol, although he testified that he had inquired what the $2/day fee covered and was told "full non-deductible coverage". While in Vancouver, 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. He was successful at trial which Tilden appealed.
- Is the exemption clause valid?
Appeal dismissed with costs.
Dubin, writing for the majority, held that the exclusion clause conflicts with the total coverage clause. Further the clause is onerous as it is overbroad - a driver would not be covered if they had a single glass of wine or if they were driving 1km/h over the speed limit. Tilden argues that under L'Estrange as Clendenning signed the contract he was bound. This is rejected as the clerk was aware he had not read the contract and the purpose of signing is to manifest consent (consensus ad idem). Dubin highlights the distinction between the consumer and commercial spheres: a signature in the commercial sphere creates the presumption of an agreement whereas the reality in the consumer sphere is not that of consensus; generally the signing of a contract is hurried and informal. Sufficiency of notice and proportionality trump the notion that the signature is binding.
Lacourcière, in the dissent, held that the contract was not difficult to read (the terms clearly printed on the reverse) and was brought to the customer's attention clearly, fulfilling sufficiency of notice. While agreeing that the clause is strict, he held that it was economically efficient as insurance companies set their rates based on risk and as other rental companies have a similar approach it was not an unusual clause. Citing New Zealand Shipping Co. Ltd. v A.M. Satterthwaite & Co. Ltd., he finds that the court should give effect to the intent of a commercial document. With this he concludes the contract was binding.
In the consumer sphere, sufficiency of notice and proportionality trump the L'Estrange notion that a signature alone is binding.
If a term of the contract is particularly onerous, the party looking to enforce that term must prove the other party was aware of the term through either their reading of the specific term or through direct notification of the specific term..