Incorporation of terms of trading into contracts

Barry Riley

Rooney and another v. CSE Bournemouth Limited

This case began as a claim was made for damages arising from negligent work which resulted in damage being caused to an aircraft carrier.  The Defendant (CSE) sought to rely on its terms and conditions, but it was argued by the Claimant that they hadn’t actually been incorporated into the contract between the two of them.

Standard terms used by businesses are not binding on customers unless they have been incorporated in the contract with their customers.

At first instance, it was accepted by the judge that the work order was arguably a contractual document, but he concluded that the Defendant had no real prospect of establishing that its standard conditions of trading were incorporated into the contract.  This was a result of the lack of express language throughout the document about the proposed incorporation of the terms i.e. nowhere in the document did it say “the order is subject to terms and conditions”.

However, the Court of Appeal disagreed with this decision, and it was held that the words “terms and conditions available on request” in the work order could be interpreted as incorporating terms of trading into the contract between the parties.

The ultimate question was whether reasonable people in the position of the parties would understand the words used as referring to contractual terms upon which the Defendant had agreed to do the work.

Although the appeal was from an order striking out part of a Defence, the Court of Appeal’s decision here is an illustration that the courts will consider the overall factual matrix when determining whether terms have been incorporated or not, even if the language is not clear.  It is a further reminder to all of the great importance of using clear language to incorporate terms of business, as the Defendant might have easily avoided this aspect of litigation, had the language contained in the work order been clearer.

Express incorporation is always advisable, and it is always wise for businesses to ensure that their order forms include their terms of trading.

Barry Riley
briley@metcalfes.co.uk
DDI – 0117 9453 042

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