Incorporation of standard terms

13 January, 2011

This note considers the circumstances in which a supplier’s standard terms of business will be incorporated into a contract in the light of Rooney and another v CSE Bournemouth Ltd [2010] EWCA Civ 1285.

Under English law a supplier’s Standard Terms of Business will not be binding on its customers unless they have been incorporated in the contract which is offered by the supplier and accepted by the customer.

In a recent case1, the Court of Appeal held that the words “terms and conditions available on request” on a statement of work could be interpreted as incorporating the supplier’s Standard Terms of Business into the contract between the parties. The judge at first instance said that the statement of work did not incorporate the Standard Terms of Business because it did not use express language of incorporation such as “this order is subject to the Supplier’s Standard Terms of Business”. However, the Court of Appeal disagreed and held that the terms of business had been successfully incorporated, explaining that, ultimately the question was whether reasonable people in the position of the parties would understand the words used as referring to contractual terms upon which the Supplier had agreed to carry out the work.

This case illustrates that the courts are willing to consider the overall factual matrix when determining whether Standard Terms of Business have been incorporated into the contract or not. However, it also illustrates the importance of using clear language to incorporate Standard Terms of Business as the supplier in this case might have been able to avoid the cost of litigation if the language it had used on the statement of work had been less ambiguous.

 

1 Rooney and another v CSE Bournemouth Ltd [2010] EWCA Civ 1285

 

Reviewed in 2015