The problems involved in the area of exclusion clauses and third parties, either in allowing a third party to shield behind a clause in a contract to which he is not a party or holding such a person bound by clauses contained in other persons’ contracts, are well-known outside the specific context of a bailment, and the economic inefficiency1 which a strict adherence to the doctrine of privity of contract would produce has led the courts to find various ways to circumvent its operation.2 The most common device is the imaginative finding of a contract between the plaintiff and defendant.3 This is not, however, foolproof:4 each case turns on a minute examination of its own facts and it is often impossible to know in advance what the potential liability of the third party will be. A potentially more certain route is the use of any excluding or limiting term to qualify the duty of care owed by the defendant to the plaintiff in negligence, a solution recently adopted by the English Court of Appeal in Norwich City Council v. Harvey 5 and the Court of Appeal of British Columbia in London Drugs Ltd. v. Kuehne & Nagel International Ltd.6 Although such a device overcomes many of the difficulties of the contractual solution, it is still in its infancy and, because it appears to be in conflict with the decision of the House of Lords in Scruttons v. Midland Silicones,7 may not withstand the scrutiny of the higher courts.

When, however, we move to the area of bailment, there seems to be no doubt that, despite the absence of a relationship of privity of contract between bailor and sub-bailee, the sub-bailee can, in certain circumstances, rely on any exculpatory provisions contained in his own contract of bailment. This is the so-called doctrine of bailment on terms. Two quite separate explanations of this phenomenon compete for acceptance in this area. The first, espoused by Lord Denning, M.R., in