8 July 2011 | Liz Fletcher
If terms and conditions are "available on request", do they form part of the contract?
The case
This case considered the meaning and effect of the
phrase "terms and conditions available on request" and if this was
sufficient to effectively incorporate the terms into a contract. Rooney Air
Limited the owner of an aircraft, entered into a management agreement with EBJ
Operations Limited. EBJ
subsequently entered into an agreement for the repair and maintenance services
for the aircraft with CSE Bournemouth Limited.
In June 2008, 75 per cent of the aircraft's left
engine's cowling became detached whilst in flight and caused serious damage. It
was established that this was due to CSE's engineers forgetting to securely
fasten the cowling after carrying out works to the aircraft. EBJ assigned its
rights to recover damages from CSE to Rooney. Rooney then issued proceedings
against CSE for the damage caused to the aircraft by CSE's engineer's negligence.
CSE's standard contracting procedure when
undertaking any work for a client was for a works order to be completed by EBJ.
The works order was a short document which stated the customer's name, the
aircraft, the place where the work was to be carried out and the item of work
to be done. There were no terms and conditions attached to the works order, but
some small text appeared below the signature box that stated "terms and conditions
available on request".
CSE's standard terms restricted EBJ's right to
assign the contract to Rooney and also limited CSE's liability under the
contract. The main issue came down to whether or not the wording under the
signature box was sufficient to incorporate these terms into the contract.
Rooney argued a reasonable person reading "terms
and conditions available on request" would not have thought the conditions
were part of the contract.
At first instance the Court agreed with this
reasoning - firstly, the words did not expressly state that the terms and
conditions were incorporated in to the contract and, secondly, the words used
did not refer explicitly to CSE's standard terms of trading but merely to
'terms and conditions'.
But Court of Appeal found in favour of CSE. It
would be expected that any businessmen in the position of the parties could
only assume that the meaning of the words was to incorporate CSE's standard
terms and conditions in to the contract and they would have been provided if
Rooney/EBJ had requested.
What
does this mean?
While this case was not a full hearing (but an
application for striking out part of a defence) and was in this instance
decided in CSE's favour, it highlights the importance of putting the question
of incorporation beyond doubt. It is worth noting that this case may have had a
different outcome had Rooney been a consumer rather than a business.
Parties should specifically describe any standard
terms they wish to contract on and need to ensure clear drafting and
unambiguous language is used effectively to incorporate any terms. It would be
beneficial to attach a copy of the terms that are referred to (or provide an
internet link if electronic) so that there can be no argument over
incorporation or which terms are applicable.
☛ By Liz Fletcher, associate, Hugh James
