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Incorporation of contract terms by a ‘consistent course of dealing’

Published online by Cambridge University Press:  02 January 2018

Elizabeth MacDonald
Elizabeth MacDonald*
Affiliation:
University College of Wales, Aberystwyth
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Extract

What little empirical work there has been in the field of contract law has revealed that the parties do not always regard the legal enforceability of their agreements as a high priority. Problems arise when this attitude is combined with the use of standard terms by one or both parties. Perhaps the best known example ofthis is the ‘battle ofthe forms standard forms are exchanged with no attention being given to their inconsistencies and it then becomes very difficult to determine which set of terms actually form the basis of the contract. Another problem occurs where the parties have carefully negotiated some part of their contract only to discover, when a dispute arises, that it is inconsistent with the standard terms which were incorporated into the contract and to which neither party had paid much attention. This article is concerned with the problem which occurs when one party has a set ofstandard terms but has introduced them into the transaction after the contract has been concluded.

Type
Research Article
Information
Legal Studies , Volume 8 , Issue 1 , March 1988 , pp. 48 - 60
Copyright
Copyright © Society of Legal Scholars 1988

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References

1. Macaulay, ‘Non-Contractual Relations in Business’ (1963) Am Soc Rev 45 in Sociology of Law (ed Aubert, 1969) 195; Beale and Dugdale, ‘Contracts Between Businessmen: Planning and the Use of Contractual Remedies’ (1975) 2 Brit J Law and SOC 18; Yates, Exclusion Clauses in Contracts (2nd edn, 1982) pp 19–33; Lewis, ‘Contracts Between Businessmen: Reform of the Law of Firm Offers and an Empirical Study of Tendering Practices in the Building Industry’ (1982) 9 Brit J Law and Soc 153; Livermore, ‘Exemption clauses in Inter-Business Contracts’ (1986) JBL 90.

2. It may appear absurd that standard terms could play a part in a transaction between parties who exhibit a lack of interest in the rules of contract law, but the person who makes the contract is not necessarily the person who drafted the standard terms and who thought it would be a good idea to use them.

3. British Road Services Ltd v Arthur Crutchley & Co Ltd (1968) 1 All ER 811; Butler Machine Tool Co v Ex-Cell-O Corpn (1979) 1 All ER 965; Howarth, ‘Contract, Reliance and Busines Transactions’ (1987) JBL 122.

4. Evans & Son (Portsmouth) Ltd v Andrea Merzario Ltd (1976) 2 All ER 930; Johnson Mathey Bankers Ltd v The State Trading Corp of India Ltd (1984) 1 Lloyds Rep 427; Mendelssohn v Normand (1970) 1 QB 177.

5. Spurling v Bradshaw (1956) 1 WLR 461; McCutcheon v David McBrayne (1964) 1 WLR 125; Kendall v Lillico (1969) 2 AC 31; Transmotors Ltd v Robertson, Buckley & Co Ltd (1970) 1 Lloyds Rep 232; Hollier v Rambler Motors (1972) 2 QB 71; British Crane Hire v Ipswich Plant Hire (1975) QB 303; Walek v Chapman (1980) 2 Lloyds Rep 279; SIAT v Tradax (1978) 2 Lloyds Rep 470, affd (1980) 1 Lloyds Rep 53; Lamport & Holt Lines Ltd v Caubro & Scrutton Ltd (1981) 2 Lloyds Rep 659; Victoria Fur v Roadline (1981) 1 Lloyds Rep 570; Chevron International Oil Co Ltd v A/S Sea Team (1983) 2 Lloyds Rep 356; Johnson Mathy Bankers Ltd v The State Trading Corpn of India Ltd (1984) 1 Lloyds Rep 427.

6. [1956) 1 WLR 461.

7. Per Denning LJ at 471.

8. [1964) 1 WLR 125.

9. At 138.

10. At 132.

11. At 129.

12. [1969) 2 AC 31.

13. AJC Hogget, ‘Changing a Bargain by Confirming it’ (1970) 33 MLR 518 at 520–521.

14. Although Lord Reid did mention the fact that past transactions had included a document and the instant case was entirely oral (1964) 1 WLR 125 at 127.

15. [1964) I WLR 125 at 127–128.

16. At 128.

17. (1877) 2 CPD 416.

18. Eg, Richardon v Rowntree (1894) AC 217; Thompson v London, Midland and Scottish Rly Co (1930) 1 KB 41.

19. Mellish LJ in Parker at 424.

20. [1964) 1 WLR 125 at 139, see also Lord Hodson at 130, Lord Guest at 131, Lord Devlin at 136.

21. Per Lord Devlin at 136.

22. P. S. Atiyah, The Rise and Fall of Freedom of Contract (1979) at 732.

23. See text at n 35.

24. [1969) 2 AC 31.

25. At 90 and 113. In PLM Trading Ltd v Georgiou (1986) 10 June, Lexis transcript, the Court of Appeal distinguished the case before them from McCutchcon on the basis that in the instant case the ‘confirmation of order’ document had eventually turned up and been signed whereas in the earlier case the risk note never appeared. However, the court gave no reason for regarding this as important and otherwise emphasised what D must have known, from the course of dealing, at the time when he placed the order for the goods by telephone. This emphasis would fit with the test for incorporation by a consistent course of dealing suggested in this article.

26. At 113.

27. At 130.

28. [1966) I WLR 287, sub nom Hardwick Game Farm v SAPPA at 308.

29. At 339.

30. [1978) 2 Lloyds Rep 470.

31. At 490.

32. (1980) 1 Lloyds Rep 53.

33. See text at n 57.

34. Johnson Mathey Bankers v State Trading Corpn of India (1984) 1 Lloyds Rep 427 at 433.

35. See text at n 20.

36. Hollier v Rambler Motors (1972) 2 QB 71; British Crane Hire v Ispwich Plant Hire (1975) QB 303.

37. Supra n 36.

38. At 311.

39. At 313.

40. At 310.

41. At 311.

42. [1978) 2 Lloyds Rep 470 at 490.

43. Photo Productions v Securicor (1980) AC 827, per Lord Wilberforce at 843; Lord Diplock 851; Mitchell v Finneylock (1983) 2 AC 803 at 810 quoting from Lord Denning MR in the Court of Appeal at (1983) 1 QB 284 at 299.

44. Lord Reid in McCutcheon (1964) 1 WLR 125 at 128.

45. SIAT v Tradax (1978) 2 Lloyds Rep 470 at 490.

46. [1964) 1 WLR 125 at 134.

47. [1956) 1 WLR 461.

48. [1969) 2 AC 31, Lord Morris at 90, Lord Pearce at 113.

49. [1956) 1 WLR at 468.

50. [1983) 2 Lloyds Rep 356.

51. Thornton v Shoe Lane Parking (1971) 2 QB 163. Megaw LJ at 173.

52. Thornton at 170. See also Spurling v Bradshaw (1956) 1 WLR 461 at 466; Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd (1987) Times, 14 November.

53. Brownsword (1972) 35 MLR 183.

54. Clarke, ‘Notice of Contractual Terms’ [1976) CLJ 51 at 70.

55. [1964) 1 WLR 125 at 128.

56. See text at n 49.

57. [1978) 2 Lloyds Rep 470 Donaldson J (1980) 1 Lloyds Rep 53, CA.

58. Hardwick Game Farm v SAPPA (1966) 1 WLR 287 at 339 (which went to the House of Lords, sub non Kendall v Lillico (1969) 2 AC 31).

59. [1978) 2 Lloyds Rep 470 at 490.

60. The Hannah Blumenthal (1983) 1 All ER 34; The Splendid Sun (1981) QB 694; The Golden Bear (1987) 1 Lloyds Rep 330; sed contra Felthouse v Bindley (1862) 11 CBNS 869.

61. [1985) 2 All ER 796 at 805.

62. [1980) 1 Lloyds Rep 53.

63. [1956) 1 WLR 461.

64. [1980) 1 Lloyds Rep 53 at 58.

65. Howarth, op cit n 3 in the context of the ‘battle of forms’.

66. [1964) 1 WLR 125.

67. [1978) 2 Lloyds Rep 470.

68. McCutchcon v David McBrayne (1964) 1 WLR 125, per Lord Reid at 128.

69. See n 1.