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Commercial Contracts - What Terms and Conditions Are Incorporated?

In many commercial disputes one deceptively simple, but at the same time crucial, question arises: whether particular terms and conditions are incorporated in a contract. A High Court ruling provided an excellent illustration of how the legal principles that apply to resolving such issues operate.

A meat producer lodged a claim for almost £400,000 in damages after mould was found on its products that had been stored in a refrigeration facility. The products had to be condemned. The facility's operator denied that the loss arose from any failure in its refrigeration system or from any breach of contractual duty on its part.

The operator further argued that terms and conditions (T&Cs) recommended by the Food Storage & Distribution Federation were incorporated in its contract with the producer. The T&Cs required any claim to be brought within a nine-month time limit, which the producer was alleged to have exceeded. They also limited the operator's potential liability to £250 per metric tonne. The question of incorporation was considered by the Court as a preliminary issue.

Ruling on the matter, the Court noted that the meat was not stored under the terms of a written contract. Although the T&Cs were widely used in food storage contracts, it was not satisfied on the evidence that they were so standard in the industry that both producer and operator would have understood that they were incorporated. It could not see that their incorporation was either obvious or necessary to give the contract business efficacy.

The Court rejected the operator's argument that it had been made apparent to the producer, in the course of various telephone conversations, that the T&Cs were incorporated. It was also unpersuaded by arguments that incorporation was achieved when one of the producer's managers signed invoices which made reference to the T&Cs.

The Court concluded that the T&Cs were not incorporated in the contract and that the producer's claim was thus not subject to the time and liability limitations that they would otherwise have imposed.

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.