BetterLawNotes-5 (2)

CONTRACT LAW

Businesses commonly employ standard form contracts in their dealings with others. That is, they present the other party with a pre-prepared document containing the only terms on which they will contract. Not surprisingly, a company’s standard terms, which will often be drawn up by its lawyers, will usually be weighted heavily in the company’s favour. Problems may arise where two businesses want to contract with each other but each wants to contract on its own standard terms.

British Road Services Ltd v Arthur V Crutchley & Co Ltd [1968] 1 All ER 811

Under a long-established course of business, BRS would deliver goods to AVC for storage. The BRS delivery driver would present a delivery note which stated that goods were delivered on BRS’s standard conditions. The delivery note would be stamped by AVC’s warehouseman ‘Received under AVC conditions’. On one occasion a quantity of whisky delivered by BRS was stolen from AVC’s warehouse. AVC’s conditions included a clause which in effect limited its liability for the stolen whisky to a sum substantially lower than the whisky’s actual value. BRS’s conditions contained no such limitation of liability. Each party argued that its conditions were incorporated into the contract. The Court of Appeal agreed with the trial judge’s finding that AVC’s conditions were, and BRS’s were not, incorporated into the contract.

Butler Machine Tool Co Ltd v Ex-Cell-O Corporation (England) Ltd [1979] 1 WLR 401

C offered to sell a machine tool to D at a set price. The terms included a price variation clause whereby C reserved the right to charge D the price prevailing at the time of delivery. D replied on its own order form which contained no provision for varying the price. The order form had a tear-off acknowledgment slip to be signed by the seller stating that the order was made on the terms set out in the order form. C signed and returned the slip with a covering letter stating that delivery was to be on the terms of its original quotation. Delivery of the machine tool was delayed for 12 months due to the fault of D. C sought to recover a higher price based on the price variation clause. The Court of Appeal held that D’s order was not an acceptance of C’s offer but a counter-offer which was accepted by C signing the acknowledgment slip. The contract thus contained no price variation clause.

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