Do your Terms & Conditions apply?

The Technology and Construction Court recently decided in the case of Transformers & Rectifiers Ltd -v- Needs Ltd [2015] EWHC 269, that neither party’s terms & conditions (‘T&Cs’) applied to their contracts, despite the 20 years of commercial dealings between them!

The Defendant, Needs Ltd, would supply to the Claimant, Transformers Ltd, nitrile gaskets and other components, and had done so for many years.  However, a dispute arose over the suitability of the supplied gaskets in two specific contracts in March 2012 and February 2013.  Both parties submitted to the Court that their respective T&Cs applied.

Transformers Ltd would place an order using its standard ‘Purchase Order Form’.  That order form had its T&Cs printed on the reverse, yet the front of the order form made no mention of this.  Order forms would be communicated to Needs Ltd by post, fax and email.  However, where fax or email was used, it would often only transmit the front page and not the T&Cs on the reverse.

Needs Ltd would acknowledge the order by sending its standard ‘Acknowledgement of Order Form’ which included in the footer some small print indicating that the price and delivery were subject to their T&Cs, which were available on request.

Needs Ltd admitted they were aware of Transformers Ltd T&Cs because of the length of time they had been doing business.  Transformers Ltd never asked to see Needs Ltd’s T&Cs and were never given a copy.

The Court held that neither party’s T&Cs applied.  In its decision, the Court stated that Transformers Ltd did not give Needs Ltd reasonable notice of its T&Cs, and in turn, Needs Ltd never gave a copy of their T&Cs to Transformers Ltd. 

The key principle is that a party’s T&Cs will not be incorporated unless that party has given the other party reasonable notice of those T&Cs.  Reasonable notice means drawing the T&Cs to the attention of the other party.

Be aware that if the other party’s T&Cs are referred to after yours then these could apply if you do not object to them.  Also, T&Cs on the reverse of an invoice will be too late if one party has already accepted the T&Cs of the other party when the contract was entered into.

This case is a helpful reminder for businesses on how they can ensure their T&Cs apply when entering into contracts.  You can protect yourself by ensuring your T&Cs are accepted before the contract is entered into.  It is important that you do this each and every time you deal with a party and for every method of communication that you use.  Consider having the other party sign and return your T&Cs or have a contract signed by both parties which includes the agreed terms.

Finally, be aware that your conduct after the contract is entered into; including verbal dealings and correspondence, may in some circumstances vary the agreed contractual terms.

For further advice please contact any member of our commercial team, either at our Poole office 01202 725400 or our Dorchester office on 01305 251007.