BetterLawNotes-5 (2)

CONTRACT LAW

As an alternative to incoproation through the parties’ course of dealing, a provision may be held to have been incorporated into the contract because it is customary in the parties’ trade for it to be so.

British Crane Hire Corporation Ltd v Ipswich Plant Hire Ltd [1975] QB 303

IPH needed to hire a crane urgently. They arranged over the telephone for one to be supplied by BCH. Soon after the crane was delivered BCH, in accordance with their usual practice, sent out a printed form to be signed by IPH containing details of the hiring and their standard conditions. Before the form was signed the crane sank in soft ground. Under their standard terms BCH were entitled to recover the costs of recovering the crane from IPH. IPH claimed that the conditions had not been incorporated into the contract. The Court of Appeal held that the conditions had been incorporated, despite there being no sufficient course of dealing between the parties. Both parties were well-established firms in the business of hiring out large equipment. BCH’s standard conditions were based on those of the Contractors’ Plant Association, which IPH themselves used when hiring out equipment. IPH knew that plant such as the crane would not be hired out without conditions being imposed and that one such condition would be that the hirer would indemnify the owner for the costs of recovering a crane which sank in soft ground.

Scheps v Fine Art Logistic Ltd [2007] EWHC 541 (QB)

C bought a sculpture by the Turner Prize-winning artist Kapoor for $35,000. At the time of the sale, the sculpture was being stored by Christies. C instructed D, a firm of freight forwarders, to collect the sculpture and transport it to Kapoor’s studio in Switzerland for restoration. D collected the sculpture and put it into temporary storage at its own premises pending its transfer to Switzerland. According to D, the sculpture could not subsequently be found: D supposed that it had mistaken for waste and been disposed of.
D argued that under its standard terms and conditions its liability for the loss of the sculpture was limited to a sum a little under £600.

Relying on the British Crane Hire case, D submitted that its standard terms had been incorporated in to its contract with C as it was ‘usual in the transport and storage trade for services to be provided on standard terms and conditions that limit liability and that the Claimant was aware of this as a result of his considerable experience of arranging for the transport of works of art’ (at [10] (Teare J)).

 

Teare J held that D’s T&Cs had not been incorporated: D had not supplied C with its T&Cs at any stage, nor any document referring to those T&Cs. Further, C was a private customer. While C might have understood that D’s services would be supplied according to certain T&Cs which would limit D’s liability, that was not sufficient for D’s T&Cs to be incorporated: as D had never mentioned its T&Cs it had, judged objectively, and there was no reason to assume that C intended to contract on the basis of D’s T&Cs.

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