A recent ruling should make businesses look again at their standard terms and conditions (STCs) of business and ask themselves: are they incorporated into our contracts; and if so, can we rely on them? The award-winning commercial lawyers at ParrisWhittaker are specialists in representing businesses in disputes involved their contracts terms, including standard terms and conditions.
It is usual for businesses providing goods and services to reference their STCs and incorporate them into the main contract with the customer. These terms typically cover issues such as definitions, delivery dates, intellectual property issues and cancellation rights. Any onerous clauses must be expressly brought to the other party’s attention, otherwise there is a risk you cannot rely on them.
A High Court1 ruling from the UK is a salutary warning to businesses about their reliance on STCs and the limits to which they may enforce them against another party. The ruling has persuasive authority on the courts in The Bahamas and should be noted.
What happened in this case?
The defendant is a social care provider for vulnerable people in England. The claimant was a mobile phone and telecommunications provider. The defendant placed an order for the supply of 800 mobile phones for at least 48 months at a monthly rental of £9,600, which it later cancelled.
However, under the claimant’s standard terms and conditions (STCs), which had purportedly incorporated into the contract, an admin charge of £225 per connection was payable in the event of cancellation. In reliance on those STCs, it sued for £180,000. The High Court refused the claim.
The court ruled that while there was a binding contract and the STCs had been incorporated into it, the claimant was not entitled to enforce what amounted to “unduly onerous” clauses. It found on the facts that:
The clauses had not been fairly and reasonably drawn to the defendant’s attention. For instance, the defendant had not been told and had no reason to believe it would be exposed to a significant liability if it cancelled its order
The defendant had been misled as to the nature of the contract. In fact, the case came very close to a misrepresentation case in that the offending terms were concealed within detailed T&Cs
They were not even headed as Standard Terms and Conditions
In practice, the STCs amounted to more than “a page of detailed text, in closely spaced small type and with no separate clause headings…” The court said they not at all user-friendly to any reader, let alone a non-legal reader
Even if they were properly incorporated into the contract, the clauses amounted to penal clauses and were, therefore, void. For instance, the amount of the admin charge bore no relationship to any actual administration costs incurred or likely to be incurred.
The claimant was not, therefore, entitled to damages for breach of contract.
What does this mean?
This case is a clear lesson to businesses in how best to treat their standard terms and conditions. In light of the ruling, it would be prudent to review your contracts to ensure your STCs are clearly headed and described as such, and unambiguously incorporated into your contracts.
You should also review your them to ensure that any potentially onerous clauses are identified and have been expressly brought to the other party’s attention. If they have not been flagged up with the other party, be prepared to be unable to rely on them should a dispute arise.
Contact the expert commercial lawyers at ParrisWhittaker for robust advice and representation as early as possible. We can guide you through your contract disputes as well as helping you take the appropriate practical steps to ensure your STCs are successfully incorporated into your contracts.
