Am I bound by the small print in a business-to-business contract?


08 November 2021

The recent High Court judgment in the case of Blu-Sky Solutions Ltd v Be Caring Ltd [2021] EWHC 2619 (Comm) will be of interest to business owners who find themselves being held to particularly onerous clauses ‘buried’ deep within the small print of business-to-business (B2B) contracts. 

What was the claim about?

The defendant, the UK’s largest employee-owned not-for-profit social care provider, was sued by what its barrister called a "ruthless commercial operator" claimant supplier of mobile phones and related services.

The claimant had ‘cold called’ the defendant, offering it cheaper line rental on 800 mobile phone handsets used by the defendant’s staff.

The claimant’s order form stated at the bottom that “all orders and contracts are subject to and incorporate our standard terms and conditions…by signing this document I agree I have logged on to the Blu Sky website…have read agree and fully understand all terms and conditions…and am bound by the same”. The defendant signed the order form without having logged onto the claimant’s website to read its terms and conditions.

The defendant subsequently emailed and cancelled the order, prior to the claimant having completed connections of the handsets with the relevant mobile network provider.

Within the claimant’s standard terms and conditions on its website, clause 4.6 provided that in the event of cancellation before connection the claimant would be entitled to levy an “administration charge” of £225 per connection. The claimant then sought to enforce this clause, and claimed £225 for each of the 800 handsets. The defendant told the court that if the £180,000+VAT claim was successful it would be “catastrophic” and likely result in redundancies having to be made. However, the Judge made clear that he reached his judgment by“dispassionately” applying the law and making the necessary factual findings.

The defendant’s main arguments were as follows:

  1. that the order form did not create a contract between the claimant and defendant

The defendant lost on this point – the Judge held that on an objective analysis, by signing the order form the defendant was accepting that it was entering into a contractual relationship with the claimant. 

  1. the claimant’s standard terms and conditions were not incorporated into the contract

The defendant also lost on this argument. The court found that the relevant standard terms and conditions were accessible from the claimant’s website, and were sufficiently brought to the defendant’s attention.

  1. Clause 4.6 was an unusual and onerous term, and was not incorporated into the contract

The defendant was successful on this point, and the claimant’s claim therefore failed. The Judge found that clause 4.6 was an onerous condition, had not been fairly or reasonably brought to the defendant’s attention, and had not therefore been incorporated into the contract.

The Judge referred to the principle summarised in the case of Goodlife Foods Ltd v Hall Fire Protection Ltd [2018] EWCA Civ 1371 that:

‘It is a well-established principle…that, even if A knows that there are standard conditions provided as part of B’s tender, a condition which is “particularly onerous or unusual” will not be incorporated into the contract, unless it has been fairly and reasonably brought to A’s attention’.

The Judge held that clause 4.6 was a particularly onerous condition because it bore no relationship to any administration costs incurred or likely to be incurred by the claimant, and the amount of £225 was “out of all proportion” to any reasonable estimate of loss resulting from a cancellation.

The Judge ruled that as an onerous condition, clause 4.6 had not been fairly or reasonably brought to the defendant’s attention, but was “buried in the middle” of the lengthy standard terms and conditions and “…cunningly concealed in the middle of a dense thicket which none but the most dedicated could have been expected to discover…”.

  1. Clause 4.6 was void as a penalty clause

Given that the defendant had won on point 3, this question did not need to be determined. However, the Judge did go on to find that even if it had been incorporated into the contract, clause 4.6 was a penalty clause and therefore void and unenforceable. Part of the reasoning for this was that the £225 claimed was almost eight times the amount of any actual loss of profit suffered by the claimant per handset.

So why does this case matter for businesses?

This case may potentially be helpful to businesses seeking to persuade a court that they should not be bound by particularly unattractive or onerous clauses which their opponents have ‘buried’ within separate T&Cs, or possibly (but less likely) even within the main contractual document or order form itself.  

Whilst not found on the facts of this case, this judgement also leaves scope for argument that standard terms and conditions posted on a website might not be incorporated (and thus enforceable) if they are not sufficiently “accessible” on the website (e.g. not obviously signposted and easy to find), or if it is not sufficiently clear which of multiple different T&Cs on the website is intended to apply to that particular contract.

For businesses seeking to rely on their own terms, it is a clear warning that the more oppressive the clause, the greater the obligation is to bring it “fairly and reasonably” to the other party’s attention at the time the contract is entered into. This may include use of bold and/or large font, and specific warnings and references to such clauses front and centre on the contractual documents, not hidden away in the depths of any small print.

If you have a dispute which relates to the enforcement of onerous or unreasonable contract terms in a business to business (B2B) contract then please contact Adam Blenkinsop or another member of the Litigation and Dispute Resolution team.

Author

Adam Blenkinsop

Senior Associate

+44 (0)1603 542710

+44 (0)7971 576846

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