National Car Rental (“National”) was unsuccessful in obtaining reimbursement from a purchaser of rental vehicle insurance (“Thibodeau”) where the Court refused to uphold a contractual prohibition from driving on an unpaved road.

National Car Rental v. Thibodeau, [2005] N.B.J. No. 530, New Brunswick Small Claims Court

Thibodeau rented a 2005 Yukon four wheel drive truck from National. She also purchased National’s insurance coverage. When the truck was returned, there were scratches on the vehicle, and a branch was dangling beneath. The tow hook had also been pulled off. Damages to the vehicle were in excess of $3,000 and National filed a claim in Small Claims Court against Thibodeau.

National argued that Thibodeau could not rely on the insurance coverage she purchased as the insurance policy contained a prohibition from driving on unpaved roads. Thibodeau acknowledged that she drove on an unpaved road then stated that she did not know how the damages to the vehicle occurred. Thibodeau indicated that she was not aware of the prohibition from driving on an unpaved road. Counsel for National took the position that because Thibodeau signed her name on the bottom of the rental agreement, the exclusions in the insurance coverage were necessarily brought to Thibodeau’s attention. The Court did not agree with this proposition, citing from the Ontario Court of Appeal decision in Tilden Rent a Car Co. v. Clendenning, (1978) 83 D.L.R. (3d) 400, where the Court made the following statement:

In modern commercial practice, many standard form printed documents are signed without being read or understood. In many cases, the parties seeking to rely on 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.

The Court found that a prohibition from driving a rental vehicle on an unpaved road was an onerous and unusual condition which should have been brought to the attention of Thibodeau in order for National to rely upon it. The Court noted that it would not occur to an individual renting a vehicle, as a matter of course, that should he or she operate the vehicle on an unpaved road, this could nullify the coverage purchased by this individual. The Court refused to apply the prohibition in the contract and held that Thibodeau was not liable for any damage to the vehicle as she had purchased coverage to protect herself against this risk.

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