Relying on your own terms

Relying on your own terms

A recent case has highlighted the difficulties commercial contracting parties can face when there is a lack of comprehensive paperwork evidencing the contract reached between them. This can be a real issue when a contract does not go according to plan and the parties must then decide who is liable for default or for the consequences of something going awry with the contract.

In Allen Fabrications Ltd v ASD Ltd [2012] EWHC 2213 (TCC) the parties to a contract were a steel fabricator and a customer who wanted a steel platform building. One of the customer’s employees fell off the platform and there was an argument as to whether the steel fabricator was liable. The steel fabricator argued that it was not liable and pointed to its standard terms and conditions, which had the effect of limiting the fabricator’s liability to the price of the goods it was supplying under the contract. These standard terms were printed on the back of the fabricator’s invoice. The fabricator argued before the Court that its standard terms must have applied, as, without the customer’s signature on its standard order form, the order would not have been processed. Despite this, however, the fabricator was unable to produce a signed copy of its order form for the contract in question.
The court considered all the facts of the case and decided that the fabricator’s standard terms of contract did apply in this particular case and that, whilst the fabricator could not produce it, there must (on the evidence before the Court) have been a standard order form.
Much time and effort in front of the Court would have been saved if the fabricator had been able to produce a copy of its order form signed by its customer.
Best practice when reaching a contract is:

–   Always put the contract terms in writing,
–   Always keep a full copy of the written contract terms agreed between the parties –including any signed documents,

–   Always include clear wording in an order form to confirm that the business’ standard terms and conditions apply to the contract,

–   If you want to include provisions that attempt to limit your business’ liability in the event of something going wrong with a contract, make sure these are highlighted (for example in bold typeface) – this will make it harder for a customer to argue that the exclusion was not brought to their attention at the time they agreed the contract terms.

April Chamberlain
Managing Partner, Head of Litigation