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Beware of things hidden in the undergrowth!

By October 26, 2021No Comments

There may be a temptation when creating terms and conditions of trading to make them as one sided and impenetrable as possible and hope the other side don’t read them properly and accept them. This is particularly so when sometimes all it takes is one confirmatory click. However, a couple of recent cases have shown that such an approach can backfire.

In Phoenix Interior Design Ltd Vs Henley Homes PLC, Phoenix contracted to provide interior design services and supply certain goods to Henley as part of the refurbishment of a hotel.

The parties fell out and Phoenix sued Henley for just over £230,000. Henley defended and counterclaimed on the basis that the goods / services were defective. In response Phoenix sought to rely on a clause in their standard terms and conditions that said “the Seller shall be under no liability under the above warranty (or any other warranty, condition or guarantee) if the total price of the Goods has not been paid by the due date for payment“. Phoenix said Henley had not paid and so Phoenix were not liable to them because of the clause. Henley argued (amongst other things) that the clause was unreasonable under the Unfair Contract Terms Act (UCTA).

The court found that Phoenix could not rely on the clause for a number of reasons including:

  • It was not reasonable under UCTA (it was for Phoenix to establish reasonableness)
  • It was “tucked away in the undergrowth” of the terms and conditions

Fortunately for Phoenix they won on other grounds.

In Blu-Sky Solutions Limited v Be Caring Limited, Blu-Sky sought to enforce a cancellation fee of £180,000. At common law a condition which is “particularly onerous or unusual” will, in some circumstances, not be incorporated into the contract, unless it has been fairly and reasonably brought to the other party’s attention.

The court found that the clause in question was particularly onerous and was not fairly and reasonably brought to the defendant’s attention. The Judge commented that “the offending clause itself ….was cunningly concealed in the middle of a dense thicket which none but the most dedicated could have been expected to discover and extricate”. The claim failed because of this (and other reasons).

Summary

Although it seems counter-intuitive, clauses such as limitation of liability clauses, should be specifically brought to the attention of the contracting party and given prominence to avoid issues such as those mentioned above. There are however other hurdles to get over, such as reasonableness, which should always be borne in mind.

DISCLAIMER: Please note that this post sets out the general position under the general law. It should not be acted upon in any specific circumstances without taking specific legal advice as to those circumstances. Also, it should not be relied upon, acted upon or treated as a substitute for specific advice relevant to particular circumstances. If you do require specific advice please contact us for assistance.

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