Recent court case demonstrates why incorporation of terms and conditions matters
A recent High Court case, concerning, amongst other things, whether or not the supplier’s standard terms and conditions were properly incorporated into the contract between the parties, has demonstrated the need for careful drafting of standard terms and conditions.
Phoenix Interior Design Ltd v Henley Homes plc  EWHC 1573 (QB) was a lengthy court case involving a number of complex legal issues, including in respect of the reasonableness of an exclusion from the warranty for goods and services supplied.
The claimant – an interior designer – sought to bring a claim against unpaid invoices from the defendant for monies owed in connection with goods supplied and services rendered in relation to the refurbishment of (what the defendant claimed was) a five-star hotel in the Scottish Highlands.
The claimant asserted that the balance outstanding from the defendant comprised one half of the agreed price under the contract between them. However, the defendant counterclaimed that the goods supplied were defective. The defendant further argued that, as the last half of the price was payable on completion and (in their opinion) performance was defective, completion had never occurred and the remaining half of the price had never fallen due for payment.
In relation to the standard terms and conditions, the initial question arising was whether the claimant’s standard terms and conditions had been incorporated into the contract between the parties. Here the court referred to an earlier (2006) case for the test for incorporation with the question as to whether terms and conditions had been properly incorporated into the contract between the parties depending “on whether that which each party says and does is such as to lead a reasonable person in their position to believe that those terms were to govern their legal relations’. The court also considered whether the claimant, in issuing its standard terms and conditions, had done all that was reasonably sufficient to give the customer (the defendant) notice of those conditions.
Having been handed to, and later emailed to, the defendant, the court concluded that the claimant’s terms and conditions had been incorporated into the contract. The High Court further held that the claimant was able to recover almost all of the remaining amount of the contract price due to it, due to the successful arguments in respect of the reasonableness of its terms and conditions and the factual circumstances around the claim itself. However, this case serves as a cautionary tale to suppliers of goods and services to ensure that they provide a copy of their terms and conditions before the contract is formed and not merely after the fact – for example, on the back of the invoice.
If you require advice on your business’ standard terms and conditions and the proper incorporation of the same, or you wish to have your terms and conditions reviewed by one of our specialist corporate and commercial law solicitors, contact us by telephone on 01782 652392 or fill out our contact form here https://tinsdills.co.uk/business/company-commercial/