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Part VI Terms and Interpretation, 17 Express Terms

From: Contract Law in Practice

Neil Andrews

Content type:
Book content
Product:
International Commercial Law [ICML]
Published in print:
27 May 2021
ISBN:
9780192897947

From: Oxford Legal Research Library (http://olrl.ouplaw.com). (c) Oxford University Press, 2023. All Rights Reserved. Subscriber: null; date: 06 June 2023

Subject(s):
Construction of contract — Interpretation of contract

(p. 349) 17  Express Terms

Classification of Express Terms

Taxonomy.1

17.01  Terms can be either express or implied and they can be promissory (imposing primary duties) or non-promissory (concerning other matters: on the latter see the next paragraph). There are three types of promissory term: conditions, intermediate (or ‘innominate’) terms, and warranties (these are treated in the discussion of breach, in chapter 24).

17.02  Non-promissory terms regulate the contract without imposing primary duties. Examples are terms which: (i) postpone the contract’s operation or prevent it from occurring (‘condition precedent’);2 or (ii) cause the contract to terminate on the occurrence of a supervening event (‘condition subsequent’, see preceding footnote); or (iii) enable a party to terminate the contract; or (iv) exclude or restrict a party’s liability for breach, including in respect of non-contractual misrepresentations (exclusion clauses); or (v) choice of law or dispute-resolution agreements, for example, an arbitration clause, or a mediation clause.

17.03  As for (i), a non-promissory condition precedent can operate either:3

  1. (a)  to postpone the coming into effect of the whole contract;4 or

  2. (b)  to render the mutual operation of the contract dependent on prior satisfaction by one party of an obligation;5 an example would be where a ship is chartered to carry out research in Antarctica, but the parties make clear that the contract will not proceed unless a third party confirms that the vessel is suitable for such use; in the meantime, neither party can walk away because both are committed; but if the third party says ‘no, the ship is not suitable’, the contract has dissolved; and so, such a contract remains executory until the relevant condition precedent is triggered.

17.04  If, to vary the example just given, the period of hire is two years, and the vessel has already been to the Antarctic for one season, but the contract provides that it cannot return for a second season unless the third party confirms that it remains in a fit state for this demanding (p. 350) environment, this modality operates as a condition subsequent, its potential effect being to terminate a contract which has already been partly performed.

17.05  It must be admitted that in some nineteenth-century case law, promissory obligations, if important, were sometimes denoted as ‘conditions precedent’, but that usage seems now to have waned, even disappeared. For example, Blackburn J said in Bettini v Gye (1876):6 ‘Parties may think some matter, apparently of very little importance, essential; and if they sufficiently express an intention to make the literal fulfilment of such a thing a condition precedent, it will be one’.

17.06  And Bowen LJ said in Bentsen v Taylor Sons & Co (No 2) (1893):7

There is no way of deciding [whether an obligation is a condition] except by looking at the contract in the light of the surrounding circumstances, and then making up one’s mind whether the intention of the parties, as gathered from the instrument itself, will best be carried out by treating the promise as a warranty sounding only in damages, or as a condition precedent by the failure to perform which the other party is relieved of his liability.

Strict Liability.8

17.07  Many contractual obligations are strict, in the sense that the obligation is more intense than a duty to exercise reasonable care, or to conduct oneself reasonably, or to avoid bad faith. For example, Lord Wilberforce in Liverpool City Council v Irwin (1977) noted9 that the claimants had pleaded their claims by postulating that the landlord owed a strict obligation to maintain the common parts, a suggestion not upheld on appeal, where the obligation implied was instead merely the responsibility to exercise reasonable care. Similarly, the duty to pay a debt is strict; so too a seller’s duty to deliver goods which (i) correspond to their contractual description, (ii) are of satisfactory quality, and (iii) are reasonably fit for their intended purpose: sections 13 to 15 of the Sale of Goods Act 1979; sections 9 to 32 (goods) (see, on ‘digital content’ sales, similarly, sections 33 to 47 of the Consumer Rights Act 2015). Although the courts sometimes characterize a duty as ‘absolute’, this merely denotes a strict obligation, or at least one which does not bear the simple hallmark of a duty to exercise reasonable care.10

17.08  As noted at [28.268], the Law Reform (Contributory Negligence) Act 1945 will not apply where the contractual duty is strict; whereas that statutory (discretionary and partial) (p. 351) defence will apply if breach was of a contractual duty to display reasonable care and, on the relevant facts, that obligation subsists in parallel to a tortious duty of care.

17.09  Strict liability was imposed for bites inflicted by bugs when the claimant visited the defendant hotel’s Turkish baths: Silverman v Imperial London Hotels Ltd (1927). In that case the claimants, with the hotel management’s permission, had slept on couches within a Turkish bath. But these couches were infested with bugs and these had bitten the claimants. Swift J said:11

Applying [‘The Moorcock’ test] … the parties in this case contemplated that the cubicle and … couch … should be free from bugs or other insects which might inflict harm upon the plaintiff … [and they are here liable] although they have taken every possible step in an endeavour to make [this accommodation] fit.

17.10  In B v IVF Hammersmith Ltd (2018)12 the Court of Appeal held that the defendant IVF clinic owed a strict duty to obtain a father’s consent before implanting an embryo into the mother’s womb, but it was then held that public policy did not support a claim in this context of ‘unwanted birth’.

17.11  In the absence of a default rule that an obligation is strict, it is a matter of construction whether the contract contains language imposing strict liability. A phrase connoting non-strict responsibility might, instead of cutting back or diluting a presumptively strict obligation, coexist with a foundational obligation imposing strict liability. This was held to be the position in Scottish Power UK plc v BP Exploration Operating Company Ltd (2015).13 Here Leggatt J held that the phrase ‘a [party] seeking in good faith to perform its contractual obligations’ imposed a twofold obligation, (i) primarily that this party should seek to perform its obligations, that is, it was strictly obliged to do so; (ii) in so doing there was a super-added obligation to do so in good faith, that is, in a genuine manner. Leggatt J then held that a gas supplier’s decision to close down a gas field and so stop (for a number of years) the agreed supply of gas to a (wholesale) customer was a breach of obligation (i). Leggatt J held that it would be wrong to treat element (ii) as eviscerating or diluting that basic obligation to maintain supply to that customer. The learned judge, with respect, has extracted a complex commitment from a seemingly narrow seam, and this bifurcatory construction is based on a highly elliptical expression. But the Court of Appeal did not disturb this analysis.

Duties of Care, or other Non-strict Contractual Obligations.

17.12  However, some contractual obligations require only the exercise of reasonable care (or exercise of best or reasonable endeavours, etc), or the meeting of the relevant professional level of diligence.14

17.13  Rix LJ in Platform Funding Ltd v Bank of Scotland plc (2008) acknowledged15 that, in a contract for professional services (doctors, lawyers, surveyors, vets, etc), the professional will normally merely owe a duty to exercise due care, but there can be exceptional instances of (p. 352) strict liability, based on express terms or assurances or derived from a particular context. The majority held that a valuer’s failure to inspect the relevant property was a breach of an implied strict obligation to do so, and that his certificate, stating that he had carried out an inspection, was an express warranty and created strict liability.16

17.14  It was held in Evans v Kosmar Villa Operators (2007)17 that a tour operator owes a duty to take reasonable steps to guard its customers and guests against personal injury, a duty arising both at Common Law and under statute.18 But the Court of Appeal held that this duty did not require the operator to protect a seventeen-year-old against the danger of injury caused by diving into the shallow end of a swimming pool. The claimant was aware of the danger and the defendant had taken adequate precautions.

17.15  In Easton v Hitchcock (1912)19 held that the defendant private detective service was not liable for breach of confidentiality committed by a former employee, even though the latter’s revelation had wholly undermined the value of detective work, and even though this defendant’s advertising contained a promise of complete `secrecy’. The customer had hired the agency to keep a secret watch on the customer’s husband. The agency used various staff, one of them X. X then left the agency. X then told Z about this surveillance job. Z told the customer’s husband. The result was that the future surveillance was ruined. The Divisional Court held that the agency’s claim for charges was sound. There was no implied warranty that the agency would guarantee secrecy even with respect to its former employee’s knowledge of the relevant secret.

17.16  Atkinson J in Aerial Advertising Co v Batchelors Peas Ltd (Manchester) (1938)20 held that performance of an aerial advertising campaign on behalf of a dried peas company imported an implied term to use reasonable skill and care not to harm the company’s interests, and certainly not to fly advertising planes on occasions which will bring its customer into hatred and contempt. In breach of that term the advertiser flew over a town during the Armistice service just before 11 a.m. on 11 November. This provoked public outrage and the advertising was a commercial disaster.

17.17  In Clin v Walter Lilly & Co Ltd (2018) the following implied term was recognized within a building contract:21 ‘[37] … The Employer will use all due diligence to obtain in respect of the Works any permission, consent, approval or certificate as is required under, or in accordance with, the provisions of any statute or statutory instrument for the time being in force pertaining to town and country planning.’

17.18  As the Court of Appeal noted in Urban 1 (Blonk Street) Ltd v Ayres (2013)22 the issue whether there has been breach of an obligation to perform within a reasonable time is particularly troublesome and will turn on a range of contestable considerations.

Overlapping Contractual and Tortious Duties of Care.

(p. 353) 17.19  When a contractual duty of care overlaps with an essentially similar duty of car imposed by the tort of negligence (a case of ‘concurrent’ obligations), a claimant can select whichever cause of action he prefers, or indeed plead both (see also the discussion of contributory negligence at [28.268]). The House of Lords so confirmed in Henderson v Merrett Syndicates Ltd (1995).23 This point is important in the context of limitation of actions,24 where the possibility of more than one cause of action arising on the same facts gives rise to a well-known anomaly. Thus a defendant’s contractual liability will become time-barred six years after his breach, regardless of consequent loss; whereas, the tort claim for negligence will not arise until the claimant suffers damage or loss, a consequence which might manifest itself much later than the date of the contractual breach. Therefore, the six-year period applicable to such a tort claim will sometimes be time-barred later than the parallel contractual cause of action. The position was summarized as follows in Nykredit Mortgage Bank plc v Edward Erdman Group Ltd (No) (1997) Lord Nicholls commented:25

… causes of action for breach of contract and in tort arise at different times. In cases of breach of contract the cause of action arises at the date of the breach of contract. In cases in tort the cause of action arises, not when the culpable conduct occurs, but when the plaintiff first sustains damage.

Written Contracts: the Parol Evidence Rule

Scope of the Rule.26

17.20  A party cannot adduce evidence (oral or written) of matters arising outside the written agreement (‘extrinsic evidence’) for the purpose of seeking to add to, subtract from, vary, or contradict that document. And so, a party cannot for this purpose give oral evidence of what he or even both parties intended or agreed, nor refer to drafts or other aspects of negotiation.

17.21  The rule was formulated by Lord Morris in Bank of Australasia v Palmer (1893):27 ‘parol testimony cannot be received to contradict, vary, add to or subtract from the terms of a written contract, or the terms in which the parties have deliberately agreed to record any part of their contract’.

(p. 354) 17.22  This rule applies if a contract is wholly contained in writing. It does not apply if the contract is oral, or only partly written and partly oral.28

17.23  It should be noted that:

  1. (1)  the parol evidence rule is different from the now abrogated ‘best evidence’ rule (the need to produce an original document);29 and

  2. (2)  the parol evidence rule is also distinct from the exclusionary rule barring reference to pre-formation communications for the purpose of interpreting contractual written language ([20.27]); thus that evidential bar precludes reference to material which might or might not illuminate the process of construing the words contained in the contractual text; whereas the parol evidence rule is aimed at preventing an alteration of the contents of the text. But the rationalia supporting both the evidential bar and the parol evidence rule overlap (on six rationalia supporting the evidential bar see [20.34]).

The Parol Evidence Rule’s Exceptions or Qualifications.

17.24  However, even if a contract is wholly in writing, the rule excluding extrinsic evidence does not preclude reference to extrinsic evidence in respect of the following matters:

  1. (1)  the doctrine of rectification;

  2. (2)  collateral warranties: a collateral warranty, normally based on an oral promise or assurance, is a free-standing agreement independent of the main contract;

  3. (3)  the evidence is intended to show that it is one type of agreement;30

  4. (4)  issues of contractual invalidity, etc: extrinsic evidence is admissible to show that the supposed written contract is invalid, void, vitiated, or otherwise inoperative, for any of these reasons:

    1. (a)  mistake;

    2. (b)  lack of consideration;

    3. (c)  statutory non-compliance;

    4. (d)  illegality;

    5. (e)  fraud;

    6. (f)  misrepresentation;

    7. (g)  duress;

    8. (h)  the agreement is subject to a condition precedent;

    9. (i)  the agreement has been varied or discharged by consensus;

    10. (j)  the evidence is adduced to reveal the identity of the parties;31 or

    11. (k)  the evidence is intended to discover the subject matter of the agreement.

17.25  In Chudley v Clydesdale Bank plc (2019)32 the Court of Appeal held that the burden of proof is upon a party who wishes to assert that a written contract does not contain all the relevant (p. 355) terms, and specifically that the agreement is inoperative because it is subject to a condition precedent not contained in its written terms.

17.26  In Stevensdrake Ltd v Hunt (2017),33 no term ‘implied in fact’ was found because the proposed term would contradict the clear import of the written agreement. The agreement purported to be an exhaustive statement of the parties’ agreement but the contention was successful under a different rubric, on the basis of a post-formation estoppel by convention (on which [2.58]).

Evaluation: the Parol Evidence Rule.

17.27  It is submitted that the parol evidence rule remains an important starting-point in English contractual analysis. Indeed this rule was extolled by Lord Hobhouse in Shogun Finance Ltd v Hudson (2003), who described it as:34

… fundamental to the mercantile law of this country; the bargain is the document; the certainty of the contract depends on it and this rule is one of the great strengths of English commercial law and is one of the main reasons for the international success of English law in preference to laxer systems which do not provide the same certainty.

17.28  On the one hand, the rule seems to stand for certainty, the integrity of an agreed text, and avoidance of side disputes. As a leading textbook states:

when the parties have deliberately put their agreement into writing, it is conclusively presumed between themselves and their privies that they intend the writing to form a full and final statement of their intentions, and one which should be placed beyond the reach of future controversy, bad faith, or treacherous memory.35

On the other hand, the parol evidence rule yields to proof that the text is not in fact the exclusive source of contractual arrangements between the parties.

17.29  Because of this last point, some might regard this ‘rule’ as largely a mirage, because it is easily displaced by evidence that the ostensible written contract is not a free-standing agreement but an amalgam of written and oral undertakings, or that there is a separate ‘collateral warranty’ subsisting in parallel to the main written agreement.36 However, in Treitel’s opinion37 the ‘parol evidence rule’ creates a presumption that a contract in writing which looks like an agreement fixed in writing is indeed a complete agreement unless the party resisting that shows that the parties did not intend the agreement to be an exclusive statement of their relations. And Treitel regards the rule as a strong manifestation of the objective principle [2.18].

17.30  Robert Stevens attractively suggests that:38

[o]nce it is shown that the parties have agreed to be bound to the terms of a contract wholly embodied in a written instrument, each is bound by its terms although one or other might (p. 356) not know what they are, and even though the content of previous negotiations might be inconsistent with the terms contained in the contract … Giving effect to different terms from those contained in the written agreement would be contrary to the agreement the parties have reached.

Contractual Assurances and Collateral Warranties

Outline.39

17.31  A pre-contractual representee might contend that a misrepresentation has become (i) a ‘contractual’ term within the main contract or (ii) a ‘collateral warranty’, that is, a side-contract subsisting independently of the main contract, whether or not a statement is categorized as a misrepresentation for the purpose of rescission or as providing a tortious cause of action for damages (under section 2(1) of the Misrepresentation Act 1967, or at Common Law in the tort of negligent misstatement or the tort of deceit).

17.32  The essence of (i) and (ii) is that the maker of the statement or assurance is guaranteeing or contractually affirming its accuracy. Unlike a mere misrepresentation, which does not rest on a guaranteed figure, a collateral warranty (or contractual term) will normally yield ‘loss of bargain’ damages in favour of the representee (but see Esso Petroleum Co Ltd v Mardon [17.45] for an exception). The loss of bargain measure of damages [28.38] will place the representee in the position he would have enjoyed if the statement had been true. And thus, a pre-contractual statement can become contractually binding by becoming a term of the ensuing main contract. Alternatively, it might be treated as a collateral contract subsisting independently of the main contract. Here the courts find consideration for the representor’s promise in the fact that the representee responded to the assurance by entering the main contract.

17.33  A warranted assurance is (normally) a cast-iron commitment. It imposes strict liability, regardless of proof of fraud or carelessness: see Esso Petroleum Co Ltd v Mardon [17.45] for an exception; similarly, as noted at [28.43], in Lion Nathan Ltd v CC Bottlers Ltd (1996) Lord Hoffmann distinguished between a warranty as to quality, viz, a guarantee that the subject-matter is of a specified kind, and a (mere) warranty that reasonable care has been exercised when making a statement or making a forecast. Furthermore, the defence of contributory negligence does not apply to breach of strict contractual obligations [28.268], such as breach of a warranty.

Determining Whether a Statement Has Become a Term of the Main Contract.

17.34  For this purpose, the courts take into account a range of factors, notably the central perspective of the objective principle. In Oscar Chess Ltd v Williams (1957),40 a second-hand car, which had had a number of previous owners, was sold to a car-dealer. The latter did not check with the manufacturer whether the seller’s good faith (but false) statement that the car was a 1948 model matched the chassis details for the car. In fact, it was a 1939 model. That discrepancy (p. 357) was discovered only eight months after the sale. The vendor had not cheated, nor even acted negligently. A majority of the Court of Appeal held that, objectively, there was no reasonable basis for the car-dealer to have treated the vendor’s statement as a contractual assurance. The balance of experience did not point towards that. The logbook stated that the car was a 1948 model. The vendor had not acted unreasonably on that. In fact the logbook’s mention of ‘1948’ was the result of a previous owner’s fraud.41 One should contrast the position where the representor is in the trade: in Dick Bentley Productions v Harold Smith (Motors) (1965) [17.38], the Court of Appeal held that a car-dealer’s statement that a car had merely covered 20,000 miles since a new engine had been fitted was a contractual warranty. The true figure should have been 100,000.

Judicial Caution towards Collateral Warranties.

17.35  The courts are reluctant to find a collateral contract where the statement is made in the shadow of an imminent written contract. This is because the policy of the law is to regard the written contract as an exhaustive expression of the terms of the relevant transaction. This policy takes effect as the ‘parol evidence rule’ [17.20]. That rule states that a party cannot adduce ‘extrinsic evidence’ (ie statements, whether oral or in writing, made outside the contract) for the purpose of contradicting, adding to, subtracting from, or modifying the written terms.

17.36  Heilbut, Symons & Co v Buckleton (1913)42 contains a famous statement of that reluctance to find a collateral contract where the statement was allegedly made before the formation of the main and written contract. In that case a buyer of shares unsuccessfully contended that he had received a telephone assurance from the defendant rubber merchants who were underwriting the share issue. The claimant buyer’s contention was that, before the main contract, the defendant had orally (by telephone) warranted that the shares would be in a company having a certain characteristic (a ‘rubber’ company, as distinct from a heterogenous rubber and produce company). In fact, no such oral assurance was proved on the facts. The House of Lords held that the facts did not support (i) a finding that the claimant had received from the defendant an oral assurance that the new company was a rubber company (it was in fact a rubber and produce company); even if that statement had been made, objectively the statement was not intended to operate as a contractual assurance; (ii) nor had the claimant in fact acted on the suggested assurance that the new company was a rubber company. As for point (i), Viscount Haldane LC considered that the claimant had merely been interested in obtaining an assurance that the defendant considered the company would be commercially reliable, and that the technical issue whether it was (solely) a ‘rubber’ company or not was not material to the claimant. The defendant had stated that it was ‘bringing out’ (that is, underwriting the sale of shares in) the new company. This was a neutral, mundane, accurate, and hence non-actionable honest statement of fact.43 In the Heilbut, Symons case, in a famous passage, Lord Moulton said:44

… collateral contracts must from their very nature be rare … Such collateral contracts, the sole effect of which is to vary or add to the terms of the principal contract, are therefore viewed with suspicion by the law. They must be proved strictly. Not only the terms of such (p. 358) contracts but the existence of an animus contrahendi [an intention to create and receive a contractually binding obligation] on the part of all the parties to them must be clearly shewn. Any laxity on these points would enable parties to escape from the full performance of the obligations of contracts unquestionably entered into by them and more especially would have the effect of lessening the authority of written contracts by making it possible to vary them by suggesting the existence of verbal collateral agreements relating to the same subject-matter.

Criteria for Identifying a Collateral Warranty.

17.37  The following array of factors was successfully enumerated by counsel in Howard Marine and Dredging Co Ltd v A Ogden & Sons (Excavations) Ltd (1978):45

Whether the statement was clear and definite; whether it was intended to be a guarantee; whether there was evidence of contractual intention; whether it was incorporated expressly into final contract; whether it involved a matter of opinion or an estimate; whether it arose contemporaneously with the main contract or weeks or months prior thereto; whether the statement was within the representor’s knowledge and conversely whether the representee could be reasonably expected, or able, to ascertain it; whether the statement was inconsistent with written terms of final contract.

17.38  In particular, the courts will consider the following criteria:

  1. (1)  objective commitment by maker of statement: the court will conduct an objective assessment whether the representee was entitled reasonably to assume that the statement was being warranted, that is, guaranteed to be contractually binding;46

  2. (2)  obvious importance to representee: the court will consider whether the representee made plain, or whether it was in any event obvious, that the matter was crucial to him; for example, in Bannerman v White (1861)47 a prospective buyer asked whether sulphur had been used in the cultivation of hops, and the seller saying ‘no’; it was clear that the purchaser would have walked away if the hops had been sulphurated; this assurance had contractual effect; similarly, in City & Westminster Properties (1934) Ltd v Mudd (1959)48 the landlord, before renewing a tenancy, told the tenant that he would be free to sleep in the demised business premises at night; this was contrary to the written terms of the lease; Harman J was convinced49 by the tenant’s evidence that the matter covered by this oral assurance had been a potential ‘deal-breaker’; he held that the oral assurance should take effect as a collateral warranty; the effect of this warranty was that it was not possible for the landlord to forfeit the lease for breach of the covenant within the tenancy agreement that the tenant must not reside there at night;

  3. (3)  the court will consider the relative skill, knowledge and expertise of the parties: for example, in Harlingdon & Leinster Enterprises v Christopher Hull Fine Art (1991),50 where the purchaser was an expert and placed no reliance on the seller’s attribution (p. 359) of a work of art to a particular painter; similarly, in Dick Bentley Productions v Harold Smith (Motors) (1965)51 the Court of Appeal held that a car-dealer’s statement—that a car had merely covered 20,000 miles since a new engine had been fitted—was a contractual warranty; in fact the true figure was 100,000; and see also Esso Petroleum Co Ltd v Mardon [17.45]; in New York Laser Clinic Ltd v Naturastudios Ltd (2019),52 damages for lost profits were awarded with respect to malfunctioning hair-removing lasers, the efficiency of which had been warranted; by contrast, in Oscar Chess Ltd v Williams (1957)53 [17.34] no warranty was established when a private vendor, basing himself on a logbook which had been forged by a third party, said in good faith that a car was a 1948 model, when in fact it was a 1939 model; the representee, the buyer, was an experienced car-dealer;

  4. (4)  independent verification urged: the court will consider whether the representor asked the representee to verify the matter for himself; for example, in Ecay v Godfrey (1947)54 a seller of a second-hand boat made clear that he was assuming that the purchaser would have it surveyed first; or

  5. (5)  need for independent verification expressly negatived: conversely, it will be relevant whether the representor assured the other that such verification was unnecessary; for example, in Schawel v Reade (1913), the seller said, ‘you need not look for anything; the horse is perfectly sound. If there were anything the matter with the horse, I should tell you.’55

  6. (6)  a representation of fact is much more likely intended to have contractual effect than a statement of future fact or future forecast: Business Environment Bow Lane Ltd v Deanwater Estates Ltd (2007)56 [17.41]; but in fact this factor is no more than a vague rule of thumb; certainly predictions can sometimes involve collateral warranties; for example, a forecast was held to involve a collateral warranty that the maker of it had reasonable grounds for believing the accuracy of his prediction in Esso Petroleum Co Ltd v Mardon (1976) (see further on the latter case [17.45]);

  7. (7)  timing: the Court of Appeal in the Business Environment case [17.41] referred to the following factor:57 ‘the lapse of time between the statement and the making of the formal contract. The longer the interval, the greater the presumption must be that the parties did not intend the statement to have contractual effect in relation to a subsequent deal’;

  8. (8)  subsequent negotiation superseding informal statement: also in the Business Environment case [17.41] Morritt C formulated this factor as follows:58

(p. 360)

[23] … whether the statement is followed by further negotiations and a written contract not containing any term corresponding to the statement. In such a case, it will be harder to infer that the statement was intended to have a contractual effect because the prima facie assumption will be that the written contract includes all the terms the parties wanted to be binding between them.

17.39  In MyBarrister Ltd v Hewetson (2017) it was held59 that the defendant’s counterclaim contained an allegation that there was a collateral oral contract, namely an oral guarantee given by a company director. The guarantee was prima facie unenforceable under section 4 of the Statute of Frauds 1677, but trial would be necessary to investigate a plea based on estoppel.

17.40  In New York Laser Clinic Ltd v Naturastudios Ltd (2019)60 Cavanagh J rightly rejected the bold but quite fallacious submission by claimant’s counsel that the Edwards v Skyways ‘intent to create legal relations presumption’ [7.20], applicable to business contexts, additionally renders a pre-contractual statement presumptively a collateral warranty, without the need for the claimant to satisfy an onus of proof by reference to established indicia.

Collateral Warranty Not Found During ‘Subject to Contract’ Negotiations.

17.41  In Business Bow Lane Ltd v Deanwater Estates Ltd (2007)61 the Court of Appeal (reversing Briggs J) held that a landlord had not agreed by way of collateral warranty to waive the tenant’s liability to pay for dilapidations. It is true that such an assurance had at one point been introduced into the ‘subject to contract’ proposals (generally on matters which are ‘subject to contract’ [3.43]). But that had been overtaken by developments in the negotiations. The ‘subject to contract’ status of such negotiations strongly indicates that the final written agreement was intended to be definitive and, therefore, that this final agreement had supplanted all earlier understandings. The written contract placed the burden of liability for dilapidations on the tenant. That was consistent with standard expectations in that commercial context.

17.42  The Court of Appeal thus reversed62 Briggs J’s surprising decision that a collateral contract had arisen on these facts. The Court of Appeal considered, in effect, that Briggs J had examined the facts in a heterodox fashion. Briggs J’s error was that, although he had appreciated that a collateral contract would not arise at a date when the parties were still engaged in ‘subject to contract’ negotiation, he had treated that earlier written assurance as a pivotal part of the negotiations. This was a mistaken technique. In the Court of Appeal, Morritt C said that Briggs J’s analysis had given presumptive effect to the earlier assurance. Instead the correct perspective is to see whether, viewed objectively on the facts, the parties’ final bargaining position, at the stage when the lease was executed, was consistent with an earlier (p. 361) assurance having any collateral effect or whether, instead, the parties had elected to agree terms and thereby sweep aside all prior dealings.

17.43  In the light of the Business Environment case, Judge Richard Seymour QC said in Wimpole Theatre v JJ Goodman Ltd (2012):63

[46] … At paragraph 42 of the judgment Sir Andrew [Morritt C in Business Environment Bow Lane Ltd v Deanwater Estates Ltd [2007] EWCA Civ 622] said: ‘The law relating to collateral contracts is well-established but in connection with sales or leases of land needs to be applied with caution if not the suspicion to which Lord Moulton referred in Heilbut Symons v Buckleton [1913] AC 30 at 47.’

[47] Thus it may be overstating the position to suggest that the court should be suspicious in a case in which a collateral contract is alleged which modifies or qualifies a written agreement, but the court should certainly proceed with caution because the type of arrangement contended for is not what one would ordinarily expect to encounter.

17.44  Rather sweepingly, commenting on the Heilbut Symons case, Lord Denning said in J Evans & Son (Portsmouth) v Andrea Merzario Ltd (1976)64 that ‘much of what was said in that case is entirely out of date’ and that the courts are no longer ‘slow’ to recognize collateral contracts, and that instead ‘we have a different approach nowadays to collateral contracts’. This comment should be taken cum magno grano salis, or perhaps ignored, in the light of the Business Environment case ([17.41]).

Collateral Warranty that Reasonable Care has been Taken when Providing a Business Estimate.

17.45  In Esso Petroleum Co Ltd v Mardon (1976)65 it was held that a collateral warranty had been given (although not a guarantee of the expected level of consumer custom) and a negligent misstatement had been made when a petrol company carelessly exaggerated by nearly 200 per cent the likely throughput of a filling station. The Court of Appeal held that the representee was entitled to recover damages for money wasted in trying to run this business, but the collateral warranty (as mentioned) did not on these facts guarantee that a ‘throughput’ of 200,000 gallons of fuel would be achieved annually.

17.46  Collateral warranties are usually, but not invariably, binding contractual assurances that the relevant figure or characteristic, etc, can be relied upon as guaranteed. The exceptional possibility that the promise is not a complete guarantee is illustrated by Esso Petroleum Co Ltd v Mardon (1976). A 200,000-gallon throughput figure was characterized as a collateral warranty. But Esso was not guaranteeing a minimum turnover of that amount. Instead it was implicitly promising that the figure was based on the exercise of reasonable care. Mardon’s business losses were recoverable, but he could not obtain damages for loss of (assured/guaranteed) profit, that is, for the difference between the low throughput in fact experienced and the much higher 200,000 figure. This was for the simple reason that he had not been the beneficiary of a guarantee or warranty regarding the 200,000 figure, but merely the victim of the petrol company’s failure to exercise care when making this reassuring prediction. Lord Denning MR said:66

(p. 362)

… it was not a warranty in this sense that it did not guarantee that the throughput would be 200,000 gallons. But, nevertheless, it was a forecast made by a party Esso who had special knowledge and skill … [There] was a warranty that the forecast was sound, that is, Esso made it with reasonable care and skill. That warranty was broken. Most negligently Esso made a ‘fatal error’ in the forecast they stated to Mr Mardon, and on which he took the tenancy. For this they are liable in damages.

Similarly, as noted at [28.43], Lord Hoffmann in Lion Nathan Ltd v CC Bottlers Ltd (1996) distinguished between a warranty as to quality (viz., a guarantee that the subject-matter is of a specified kind) and a (mere) warranty that reasonable care has been exercised when making a statement or making a forecast.

Identification of Terms: Inconsistency Between Standard and ‘Bespoke’ Terms

Bespoke Terms Prevailing Over Standard Terms.

17.47  In Homburg Houtimport BV v Agrosin Private Ltd (‘The Starsin’) (2003) Lord Millett said:67 ‘[183] … It is a well established canon of construction that, where there is inconsistency between the printed terms of a standard form and the terms which the parties have themselves written into the document, the latter should prevail [citing three authorities].’

17.48  More recently, in Alexander v West Bromwich Mortgage Co Ltd (2016)68 the Court of Appeal held that a lender’s standard printed terms had not been incorporated into the mortgage agreement because those terms were inconsistent with the ‘bespoke’ terms of the offer, and the latter terms were expressly given priority under an ‘inconsistency clause’.

17.49  In greater detail, in Alexander v West Bromwich Mortgage Co Ltd (2016) the terms of the original offer restricted the lender’s capacity to vary the rate of interest so that the variation would reflect the Bank of England Base Rate. But the printed terms (hereafter referred to as the ‘non-bespoke’ terms) gave the lender a much more generous leeway when varying the interest rate (those standard terms permitted the lender to make unilateral variation of the interest rate, as well as unilateral termination of the agreement, without a default event, upon giving one month’s notice; this booklet had been handed to the borrower at the same time as the loan offer). A clause made clear that the terms of the offer document would (p. 363) prevail in the event of inconsistency (‘These Mortgage Conditions incorporate any terms contained in the Offer of Loan. If there are any inconsistencies between the terms in the Mortgage Conditions and those contained in the Offer of Loan, then the terms contained in the Offer of Loan will prevail.’).

17.50  The Court of Appeal in the Alexander case (2016) held that the factual matrix [20.48], as well as construction of the relevant documents, indicated that the borrower had thought he or she was entering a ‘buy to let’ nature mortgage, the rate of interest being variable not at the lender’s whim but solely by reference to the Bank of England Case Rate; and that the term would be for twenty-five years, subject to default events, whereupon the lender could terminate. Instead, the lender contended that the mortgage terms contained in the accompanying booklet produced a loan where the interest rate could be varied for any ‘business reason’ chosen by the lender; moreover, the lender could terminate the loan on one-month’s notice even in the absence of a default event. The Court of Appeal persuasively rejected the lender’s contentions. The decision is of great commercial significance because of the prevalence of complicated and not always harmonious provisions, and specifically because of the insertion of inconsistency clauses purporting to give priority to one segment of the contractual raft of terms.

Other Cases.

17.51  The Alexander case was considered in Dynniq UK Ltd v Lancashire County Council (2017).69 The Dynniq case did not contain an ‘inconsistency clause’, by contrast with both the Alexander case and Pagnan v Tradax (1987).70 Instead the Dynniq case involved an unsuccessful submission that part of a clause should be deleted on the basis of inconsistency with another clause.

Incorporation of Written Terms, Including Exclusion Clauses

Outline: the Five Modes of Incorporation.71

17.52  A term (including an exclusion clause) can be incorporated in one of five way (categories (1) to (3) will be further examined in the ensuing paragraphs of this section): (1) by the process of incorporation by reference (ie by indirect (p. 364) notice); or (2) by direct notice; or (3) by signature; or (4) by a consistent course of dealing between the parties;72 or (5) on the basis of trade usage.73

17.53  The main modes are (1) to (3) (and (2) and (3) will require further exegesis in the ensuing paragraphs), that is:

  1. (1)  Incorporation by Reference. Written terms can be incorporated by express reference so that they become absorbed within the main contract, that main contract normally being in writing.74 In Hamad M Aldrees & Partners v Rotex Europe Ltd (2019) Edwards-Stuart J examined75 the case law authorities concerning incorporation by reference and the relevance of a course of dealing; but on the facts, the relevant terms had not been appended at the crucial stage, and so they had not been incorporated.

  2. (2)  Direct Notice: a document containing terms will become part of the transaction, or constitute that contract, if the following requirements are satisfied:

    1. (a)  Contractual Effect. The document must be objectively intended to have contractual effect.

    2. (b)  Timing. The exclusion clause will not be incorporated if it comes to the innocent party’s notice only after the contract has been formed.

    3. (c)  Reasonable Steps Criterion. A clause contained in a contractually relevant document will be incorporated within the contract, and so bind the innocent party, if (i) he knows that the document contains writing, provided he knows that it contains terms and conditions; or (ii) the other party, who is relying on the exclusion clause, took reasonably sufficient steps to give the innocent party notice of the terms and conditions.

  3. (3)  Signature. A clause, including an exclusion clause, will be incorporated if the innocent party has signed a document containing it, even if he had neither read it nor understood its effect, unless there has been a misrepresentation by the other party, or duress, or fraud, or the signatory was wholly mistaken as to the nature of the document (on this last possibility, non est factum [12.31]).

Mode (2): Direct Notice.

17.54  Here the written term is available to be read (unlike the process of incorporation by reference—see below), but there has been no signature. The issue, therefore, is whether the term has been incorporated by direct notification. That requires focus on three issues: proposition (i)—the document purporting to contain the exclusion clause must be objectively intended to have contractual effect; proposition (ii)—timing, that is, the written term must come to the relevant party’s notice no later than the time of formation; (p. 365) proposition (iii), the reasonable steps criterion, the term must be known to the relevant party or, at least, the party relying on it took reasonably sufficient steps to give notice of it.

Contractual Document.

17.55  In Chapelton v Barry UDC (1940),76 the claimant paid 2d (two old pence) for the hire of two deckchairs from the municipal authority (one for him, the other for his girlfriend, Miss Andrews). He fell through the canvas of one of the deckchairs and injured his back. He sued for breach of contract. The Court of Appeal held that the defendant’s written exclusion clause contained on the back of his receipt for the chairs had not been incorporated. This document was not objectively intended to affect contractual rights: it was regarded by customers as merely a receipt, to indicate that a person had paid for use of the deckchair. And thus, Denning LJ in Curtis v Chemical Cleaning etc Co (1951) commented that the document:77

… might reasonably be understood to be, like a boot repairer’s receipt, only a voucher for the customer to produce when collecting the goods, and not understood to contain conditions exempting the cleaners from their common-law liability for negligence. In that case it would not protect the cleaners: see Chapelton v Barry UDC (1940).

17.56  Also in the Chapelton case, Slesser LJ said that the receipt was not a document which could reasonably be expected to contain terms. And MacKinnon LJ said that the defendant had not done enough to bring to the claimant’s attention the condition on the back of the receipt.

17.57  Similarly, in Grogan v Robin Meredith Plant Hire (1996)78 the Court of Appeal held that an indemnity had not been incorporated, even though the contractor’s time-sheets had been signed by the other party. The court held that there had been no effective incorporation of the relevant term as a variation of the original contract. The time-sheet was an ‘essentially administrative and accounting document’.

Failure to Read.

17.58  In Peekay Intermark Ltd v Australia and New Zealand Banking Group Ltd (2006)79 [11.66] the Court of Appeal held that failure to read manifestly crucial documentation, containing the relevant terms, precluded that party from asserting that he had relied on a non-fraudulent misrepresentation contained in an oral summary of those terms. But the usual position is that failure to verify a statement, which is in fact a misrepresentation, does not prevent that representee from showing reliance.80

Timing: Post-formation Notification is Ineffective.

17.59  As for proposition (ii), a term, such as an exclusion clause, will not be incorporated if it comes to the innocent party’s notice only after the contract has been formed. In Olley v Marlborough Court Ltd (1949)81 the defendant hotelier tried to escape liability for this negligence by relying on an exclusion clause placed in the hotel room. But this exclusion clause had not come to the claimant’s notice until she had gone upstairs to her room. The Court of Appeal held that this clause had no effect because it had come to the claimant’s notice too late.

(p. 366) 17.60  Similarly, in Thornton v Shoe Lane Parking (1971)82 the Court of Appeal held that notice of an exclusion clause came too late to be binding on the claimant, because the contract had already been formed once he had driven his car through the automated entrance of the defendant’s car park.

Reasonable Steps Taken to Notify Party.

17.61  The party relying on the relevant clause must have taken reasonably sufficient steps to give the innocent party notice of its existence and context.83 The leading modern discussion of this issue is the Court of Appeal’s decision in Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd (1989).84 The case did not concern an exclusion clause. But the discussion is apt to include the issue whether such a clause has been successfully incorporated. It was held that a (charges for late return) clause imposing a severe daily charge for unreturned film-transparencies was inoperative because it had not been successfully incorporated applying these principles. The contract was unsigned. Not enough had been done to bring this ‘onerous’ clause to the customer’s notice. Bingham LJ in the Interfoto case noted Mellish LJ’s analysis of the ‘ticket’ cases in Parker v SE Ry Co (1877).85 The following quotation is taken from Megaw LJ’s judgment in Thornton v Shoe Lane Parking (1971):86

… Parker v South Eastern Railway Co (1877) … established that the appropriate questions … in a ticket case were: (1) Did the passenger know that there was printing on the railway ticket? (2) Did he know that the ticket contained or referred to conditions? and (3) Did the railway company do what was reasonable in the way of notifying prospective passengers of the existence of conditions and where their terms might be considered?’

17.62  In greater detail, in Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd (1989) an advertising agency, Stiletto, hired forty-seven transparencies of scenes from the 1950s from Interfoto, a photographic library. Stiletto was later invoiced for holding on to these beyond the contractual deadline for return. Stiletto disputed liability to pay this amount. Interfoto’s small-print terms imposed a large daily fee for each transparency if they were retained for longer than fourteen days, namely, £5 (plus VAT) for each item for each extra day. It was thus a liquidated damages clause which smacked of a penalty: as noted by Bingham LJ, the customer had not pleaded that the term was void under the penalty jurisdiction.87 Interfoto’s charges were about ten times higher than those charged by competitors. The eventual bill for late return was a massive amount, nearly £4000. The initial delivery note had been headed ‘Conditions’. However, nothing more had been done to impress upon the customer the importance of these proposed terms. Nor had Stiletto signed to acknowledge notice of these terms.

17.63  The following passage indicates that the term was regarded as a surprise in the market:88

(p. 367)

Once the jiffy bag was opened and the transparencies taken out with the delivery note … the defendants would have recognized the delivery note as a document of a kind likely to contain contractual terms and would have seen that there were conditions printed in small but visible lettering on the face of the document. To the extent that the conditions so displayed were common form or usual terms regularly encountered in this business, I do not think the defendants could successfully contend that they were not incorporated into the contract.

17.64  Bingham LJ said the clause prescribing a charge for late returns purported to impose ‘inordinate’, ‘unreasonable and extortionate’ liability. Similarly, Dillon LJ said that the clause was:89

very onerous … In the present case, nothing whatever was done by the plaintiffs to draw the defendants’ attention particularly to condition 2; it was merely one of four columns’ width of conditions printed across the foot of the delivery note. Consequently, condition 2 never, in my judgment, became part of the contract between the parties.

17.65  And so, the £4000 contract claim failed. But the Court of Appeal upheld the trial judge’s substitution of a charge, based on quantum meruit principles (fair remuneration based on the market value of performance), of £3.50 per week for each transparency (whereas the contractual term imposed a liability of £35 a week). The logic behind this award was: the contractual rate of payment misfired because it had not been successfully incorporated; to fill this gap, a reasonable objective figure should be inserted. It is submitted that since the parties had, ex hypothesi, not agreed a figure for late returns (the proferens, that is, the party seeking to rely on the clause, had failed to take reasonable steps to draw the onerous term to the customer’s attention), the contract was silent on that issue. It is doubtful whether there was any commercial expectation that a hold-over fee would be charged.

17.66  More generally, the Court of Appeal in Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd (1989) reviewed the case law which requires clear incorporation of exclusion clauses or onerous or unusual terms, and some post-1989 cases are added to this list in this90 and the following note.91 The Court of Appeal in that case held that the nineteenth-century ‘ticket’ case law (concerning exclusion clauses) applies to any term if it is ‘unusual and stringent’,92 ‘outlandish’,93 ‘unreasonable and extortionate’,94 at any rate, perhaps, if (p. 368) ‘particularly’, or ‘extremely’, ‘onerous or unusual’.95 The clause in the Interfoto case was described by Bingham LJ in that very decision, and later by Hobhouse LJ in AEG (UK) Ltd v Logic Resource Ltd (1996), as ‘extortionate’.96 Dillon LJ in the Interfoto case referred to ‘a particularly onerous clause’.97

17.67  As Denning LJ had observed in Spurling Ltd v Bradshaw (1956):98

the more unreasonable a clause is, the greater the notice which must be given of it. Some clauses which I have seen would need to be printed in red ink on the face of the document with a red hand pointing to it before the notice could be held to be sufficient.

17.68  Sometimes the harshness of a clause is in the eye of the beholder. For example, in AEG (UK) Ltd v Logic Resource Ltd (1996)99 there was a difference of opinion and this affected the issue whether an exclusion clause had been incorporated into a business transaction.

17.69  The goods in the AEG case were forty-nine cathode ray tubes for use in radar equipment. The head purchaser, the claimant, a small company, was a ‘middle-man’ supplier. When the goods had been sub-sold by the claimant, to Iranian customers, it was discovered that they would not fit the customers’ radar equipment and so they rejected them. The exclusion clause imposed on the claimant purchaser the expense of transporting defective goods to the seller. On the facts this expense was considerable (over £4000) because the goods, having been sub-sold to Iranian customers, were airfreighted back to the head vendor in the United Kingdom.

17.70  This clause was held to fall foul of the statutory reasonableness test under the Unfair Contract Terms Act 1977 (applying, notably, section 3 of the 1977 Act). Hobhouse LJ observed100 that, amongst other factors, the buyer was a one-man company, and the seller was a large international enterprise. And so, all three judges concurred in the result. But, on the preliminary issue of incorporation, Hirst and Waite LJJ considered that, applying the Interfoto test, the seller had not done enough to bring the relevant clause to the buyer’s attention. In their view, the clause was ‘particularly onerous or unusual’, that phrase being the criterion or criteria prescribed in the Interfoto case. Hobhouse LJ dissented on the incorporation point, declaring that the clause was not unusual (although it was unreasonable). The outcome, therefore, was that the airfreight charge was to be paid by the defendant head vendor because it constituted ‘classic’101 mitigation expense [28.248]. The claimant had already been reimbursed the purchase price, so that the freight charge was the only issue outstanding.

An Exclusion Clause Is Not Necessarily Onerous.

17.71  Before Goodlife Foods v Hall Fire Protection Ltd (2018) it had appeared that an exclusion clause is necessarily onerous or (p. 369) unusual because it subtracts from the promisee’s protection. But one of the judgments in that case suggests (approving first instance authority in a different case)102 that an exclusion clause is not per se onerous, nor might it be unusual.

17.72  The Goodlife Foods case (2018) concerned defective fire safety equipment. It malfunctioned. Extensive property damage resulted. The contract included an exclusion clause in respect of negligence, restricting liability to the cost of replacing defective fire safety equipment, and thus excluding liability for consequential property damage. The Court of Appeal held that the clause had been adequately signalled so that the term had been incorporated. The Court of Appeal affirmed the lower court’s decision that the clause was reasonable for the purpose of section 2(2) of the Unfair Contract Terms Act 1977 (on this aspect of the case [22.56]).103

17.73  In greater detail, the defendant’s fire safety equipment malfunctioned. The claimant’s food-processing factory was severely damaged and there were business losses. The claim was for around £6.6 million. The price paid to the defendant for the equipment was around £7500.104 The malfunction was a breach of contract, but also constituted negligence actionable in tort. The contract claim was statute-barred, and so the claim was framed in tort:105 the six-year contract period ran from the installation date, the moment of contractual breach (ten years earlier); whereas the six-year tort period ran from the date of the fire, the moment when physical damages arose from the negligent installation. And so, the tort claim was not barred, but the contract claim would have been out of time.

17.74  Both parties were insured against the relevant risk. The contract was governed by the defendant Hall’s written standard terms of business. These included an exclusion clause which was apt to exclude its liability for negligence in the events which had occurred.106 Coulson LJ noted that the judge at first instance had found that the exclusion clause was not a total exemption, but limited to an undertaking to replace defective parts, and that it excluded liability for non-personal injury, that is economic loss or damage to property attributable to the defendant’s negligence or breach of contract.107 The Court of Appeal held: (i) the particular exclusion clause (which covered the relevant harm) was not an onerous clause; (ii) in any event, enough had been done to incorporate it, even if the Interfoto requirement applied (ie the need to take reasonable steps to notify the other party); (iii) the clause was not unreasonable in excluding liability for negligence and harm to property or financial loss under section 2(2) of the Unfair Contract Terms Act. Elements (i) and (ii) will be noted here but element (iii) of this decision is examined more conveniently at [22.56] in the context of exclusion clauses.

17.75  In Goodlife Foods v Hall Fire Protection Ltd (2018) Coulson LJ commented on (i) the nature of unusual or onerous terms (ii) and the need for reasonable steps to be taken to incorporate such a term.108 As for (i), the most significant comment, by Coulson LJ, is this:109 ‘the mere (p. 370) fact that the clause in question is a limitation or exclusion clause does not of itself mean that it is onerous or unusual. Everything turns on the context.’

Mode (3): Signature.

17.76  This tends to be the surest mode of incorporation but, as far as the proferens (the party seeking protection under the clause) is concerned, it is not bulletproof. A sensible further practical precaution is to buttress the overall signature(s) by requiring the signatory to sign, or at least to add his or her initials, to indicate assent seriatim to especially onerous clauses within, for example, hire documents. Users of car hire will be familiar with this sensible practice.

17.77  In L’Estrange v F Graucob Ltd (1934)110 the Divisional Court confirmed that a party’s signature is effective to incorporate into his or her agreement an exclusion clause contained in the document which that party has signed. By the act of signature, the innocent party is taken, objectively, to have assented to the exclusion clause, even if in fact he had not read it, or at least did not understand its effect. This rule was proclaimed by Moore-Bick LJ in Peekay Intermark Ltd v Australia and NZ Banking Group Ltd (2006),111 to be ‘an important principle’ which ‘underpins the whole of commercial life’ (generally on the Peekay case [11.66]).

Leading Case in Detail.

17.78  In greater detail, in L’Estrange v F Graucob Ltd (1934)112 Miss Harriet Mary L’Estrange, a café proprietor, bought an automatic slot machine (selling cigarettes) from the defendant company for her Llandudno café. The machine proved to be defective and became jammed. It was repaired. But then it broke again. Before long Miss L’Estrange had stopped allowing her clientele to use the machine. It now languished in a back room. She claimed repayment of her part-payment. The county court judge had curiously awarded her damages representing the value of the price (even though she had not pleaded a damages claim) and upheld the defendant’s counterclaim for the price. But the county court judge had not applied the signature rule (on which point the Divisional Court held that he had erred). The first instance judge instead (erroneously) considered that the case was to be governed by the ticket cases, and that L’Estrange had not received adequate warning that the written terms included the exclusion clause.

17.79  The Divisional Court reversed the judgment for L’Estrange but upheld the supplier’s counterclaim for full payment (she had already part-paid). The court applied a ‘signature rule’ and held that it was decisive that she had imprudently signed away nearly all her protection in a document (the ‘brown’ order form) containing small print. This included the following exclusion clause: ‘any express or implied condition, statement, or warranty, statutory or otherwise not stated herein, is hereby excluded’. The Divisional Court held that her decision to sign this document had the effect of incorporating the exclusion clause, whether or not she had in fact read or understood the clause.

Common Law Exceptions to the Signature Rule.

17.80  As the Divisional Court noted in L’Estrange v F Graucob Ltd,113 there are various exceptions to this signature rule, although none of these was satisfied on the present facts: duress; fraud; misrepresentation, or the (p. 371) signatory is wholly confused as to the nature of the document in narrow situations covered by the non est factum doctrine ([12.31] on Gallie v Lee (1971)).

17.81  As for the exception concerning misrepresentation, the leading case in this context is Curtis v Chemical Cleaning and Dyeing Co (1951).114 Here the dry-cleaning company told the claimant that an exclusion clause which she was about to sign covered loss due only to damage to beads and sequins. In fact, this clause covered all forms of damage, including, on the facts, a stain caused during the cleaning process. Because of this misleading statement, the defendant was precluded from relying on the exclusion clause: it had not been incorporated.

Statutory Control of Exclusion Clauses affecting Purchasers of Goods.

17.82  Miss Harriett Mary L’Estrange (see discussion, at [17.77] ff, of the Common Law signature rule) was not a consumer but a businesswoman. Nowadays, the Unfair Contract Terms Act 1977 would be applicable. Written standard terms of business imposed on another business are caught by section 3 of the 1977 Act, on which see [22.51]. That imposes a reasonableness test. Section 6(1A) of the 1977 Act would also apply on these facts, because the company’s exclusion clause affected the implied terms protecting the non-consumer purchaser. That also imposes a test of reasonableness. Section 6(1A) of the 1977 Act was inserted by the Consumer Rights Act 2015, Schedule 4(8). It states that the relevant provisions of the Sale of Goods Act 1979 cannot be excluded except in so far as this is reasonable; this refers to sections 13, 14, or 15 of the Sale of Goods Act 1979 Act, namely the seller’s implied undertakings as to conformity of goods with description or sample, or as to their quality or fitness for a particular purpose. Where the purchaser is a consumer, the Consumer Rights Act 2015 invalidates exclusion clauses affecting the purchaser’s statutory rights, as listed at section 31.

Signature Incorporating a CFA ‘Death Clause’: Payment for Legal Work Wasted if Client Dies before Conclusion of Claim Funded by a Conditional Fee Agreement.

17.83  In Higgins & Co Lawyers Ltd v Evans (2019) Saini J upheld115 a ‘death clause’ in a conditional fee agreement (the effect was to render the client’s estate liable for costs incurred pursuing the deceased’s claim). The agreement had been signed by the client in April 2016, who was then eighty-nine, and ill with asbestosis. Saini J upheld the solicitors’ claim, deciding that the client’s signature (although not a requirement for the validity of a CFA,116 a type of agreement which statutory rules require to be in writing but which need not be signed) triggered incorporation of the death clause, which appeared within the relevant written contract. Thus, the rule [17.77] in L’Estrange v Graucob applied.117

Rejection of Power to Override the Signature Rule in Absence of Misrepresentation, Duress, or Non Est Factum.

17.84  There are no additional exceptions, as Saini J made clear in Higgins & Co Lawyers Ltd v Evans (2019)118 (see the text above), noting that the signature (p. 372) rule applies even with respect to a clause of an ‘onerous or unusual nature’ (on that category of term see discussion at [17.66]). There is substantial support for this orthodoxy.119

Are There Indications of a Different Approach?

17.85  Judge Havelock-Allan QC suggested in Dawson v Bell (2016) that the law on this topic is not clear,120 and that there are contrary (and heterodox) indications in the English case law (summarized in this,121 the next,122 and the following123 note). But it is submitted that these are no more than non-binding straws in the wind and provide no basis for displacing, or qualifying the operation of, the current incorporation by signature rule.

Evaluation: Signature Rule’s Only Exceptions Are Duress, Misrepresentation, or Non Est Factum.

17.86  It is submitted that English contract law should remain clear on this point, so that incorporation by signature should continue to operate, subject only to the established exceptions. There is adequate consumer protection under statute (notably [22.64]). As for non-consumer transactions, the balance of both fairness and efficiency lies in the current signature rule. If a court were to be swayed by a sense of clemency or by considerations of abstract fairness into creating a special exception to the signature rule this would undermine the twin principles that (i) objectively the act of signature is effective to incorporates all terms which are available to be read at the time of signature, and (ii) that the Contractual Bond principle [2.40] then applies so that the signatory party cannot resile from these written terms. It is submitted that English courts should not be seduced by the siren-call of abstract justice into relaxing the signature-incorporation rule. The list of qualifications upon that rule (see above, misrepresentation, duress, or fraud, or non est factum) should not be extended, at any rate where the signatory is engaged in business.

Proferens Seeking to Rely on an Exclusion Clause was Aware of the Other Party’s Failure to Read: Canadian Discussion.

(p. 373) 17.87  The English decision in L’Estrange v Graucob (1934)124 has been distinguished by the Ontario Court of Appeal in Canada in Tilden Rent-A-Car v Clendenning (1978).125 It was there held that a party’s signature is ineffective to incorporate a term if the other party, the proferens, was aware that the signatory had not read an onerous clause, such as an exclusion clause (on the facts of the Tilden case, the relevant clause contained a strict limitation of the insurer’s liability in a car-hire insurance policy). As mentioned in the text above, this is not the position in England; moreover, also submitted above, nor should England follow Canada. McMeel considers the Canadian decision to be unattractive, at any rate if applied to a signatory engaged in trade.126

Footnotes:

1  For literature on terms, Bibliography, Part II, section (40).

2  On conditions precedent and conditions subsequent: Neil Andrews, Contract Law (2nd edn, CUP 2015) 12.06(2); Chitty on Contracts (HG Beale gen ed, 33rd edn, Sweet and Maxwell 2018) 3-028; K Lewison, Interpretation of Contracts (7th edn, Sweet and Maxwell 2020) 16-01, 16-02, 16-09 (and on conditions subsequent see 16-13) ; G McMeel, The Construction of Contracts: Interpretation, Implication and Rectification (3rd edn, OUP 2017) 2.05, and chs 3 and 20; JE Stannard, Delay in the Performance of Contractual Obligations (2nd edn, OUP 2018) 2.05 and ch 3; GH Treitel, ‘Conditions and Conditions Precedent’ (1990) 106 LQR 185; Treitel, The Law of Contract (E Peel ed, 15th edn, Sweet and Maxwell 2020) 17-015 ff.

3  In Scottish Power UK plc v BP Exploration Operating Co Ltd [2015] EWHC 2638 (Comm), [2016] 1 All ER (Comm) 536, 162 Con LR 195 at [194] ff, where Leggatt J examined (inconclusive) case law concerning conditions precedent; decision affirmed, [2016] EWCA Civ 1043.

4  Bentworth Finance Ltd v Lubert [1968] 1 QB 680 (CA).

5  UR Power GmbH v Kuok Oils and Grains Pte Ltd [2009] EWHC 1940 (Comm), [2009] 2 Lloyd’s Rep 495, [2009] 2 CLC 386 at [14] to [16], and [22] (Gross LJ).

6  (1876) 1 QBD 183, 187.

7  [1893] 2 QB 274, 281 (CA).

8  Strict and non-strict obligations: JW Carter, Carter’s Breach of Contract (2nd edn, Hart Publishing 2019) ch 2, notably 2.33 to 2.67.

9  [1977] AC 239, 256 (HL).

10  For example, (1) Ogdens Ltd v Nelson [1904] 2 KB 410, 420 (CA) (Romer LJ) (affirmed [1905] AC 109, HL) ‘undertakings … absolute in form, and in my opinion they are absolute in substance … ’ (2) Esso Petroleum Co Ltd v Mardon [1978] QB 574, 596 (CA) (Bridge LJ), referring (curiously) to s 2(1), Misrepresentation Act 1967 in this manner. (3) Classic Maritime v Limbungan Makmur Sdn Bhd [2019] EWCA Civ 1102, [2019] 2 All ER (Comm) 592, [2019] Bus LR 2854 (at [1], [11], [81], [83], [89]), in the context of a duty to provide cargoes under a contract of affreightment; and (4) Duval v 11–13 Randolph Crescent Ltd [2018] EWCA Civ 2298, [2019] Ch 357 at [7]; here Lewison LJ characterized a landlord’s unqualified duty not to allow any tenant to act inconsistently with the tenant’s covenants as ‘what is usually called an absolute covenant, which means that the lease does not contemplate that consent might be given to do that which the covenant forbids.’ And ‘absolute obligation’, was used by Lord Kitchin on final appeal, [2020] UKSC 18, [2020] AC 845 at [55].

11  (1927) 137 LT 57; [1927] All ER 712, 714; 43 TLR 260.

12  [2018] EWCA Civ 2803, [2020] QB 93; considering McFarlane v Tayside Health Board [2000] 2 AC 59 (HL) and Rees v Darlington Memorial Hospital NHS Trust [2003] UKHL 52, [2004] 1 AC 309).

13  [2015] EWHC 2638 (Comm), [2016] 1 All ER (Comm) 536 at [55], [68], [79] to [81], [120] (affirmed [2016] EWCA Civ 1043).

14  Notable examples are s 13, Supply of Goods and Services Act 1982; ss 48 to 57, Consumer Rights Act 2015.

15  [2008] EWCA Civ 930, [2009] QB 426 at [48].

16  Negligence had not been pleaded, ibid, at [53] and [63] (Moore-Bick and Rix LJJ); the dissenting judge, Sir Anthony Clarke MR said that there was no indication in this context that the certificate should trigger strict liability.

17  [2007] EWCA Civ 1003, [2008] 1 WLR 297.

18  Package Travel, Package Holidays and Package Tours Regulations 1992 (SI 1992 No 3288), regulation 15.

19  [1912] 1 KB 535 (Div Ct) (Hamilton J, 537–38; Lush J agreed).

20  [1938] 2 All ER 788, 792.

21  [2018] EWCA Civ 490, [2018] BLR 321 at [37].

22  [2013] EWCA Civ 816 [2014] 1 WLR 756 at [49] (Sir Terence Etherton C).

23  [1995] 2 AC 145 (HL).

24  Limitation of actions and contractual claims: Andrews on Civil Processes (2nd edn, Intersentia Publishing 2019) ch 8, and bibliography therein at 1148; Chitty (2018) ch 28 (AS Burrows); A McGee, Limitation Periods (8th edn, Sweet and Maxwell 2018).

25  [1997] 1 WLR 1627, 1630 (HL); and see Bell v Peter Browne & Co [1990] 2 QB 495 (CA); this disjunction between the limitation rules in tort and contract does not appear to be justifiable in principle and the author has contended that this inconsistency should be eliminated: Neil Andrews [1998] CLJ 589, 605–07.

26  Chitty (2018) 13-109 ff; Law Commission ‘The Parol Evidence Rule’ (Law Commission Report No 154, Cmnd 9700, 1986) (noted G Marston [1986] CLJ 192); D McLaughlan, The Parol Evidence Rule (Professional Publications 1976); DW McLaughlan, ‘Parol Evidence and Contract Formation’ (2005) 121 LQR 9, and D McLaughlan, ‘The Entire Agreement Clause … ’ (2012) 128 LQR 521, at 526–30; Phipson on Evidence (19th edn, Sweet and Maxwell 2017) 42-12 ff; R Stevens, ‘Objectivity, Mistake and the Parol Evidence Rule’ in AS Burrows and E Peel (eds), Contract Terms (OUP 2007) ch 6, at 107 ff; Treitel (2020) ch 6, part 1(c); for scepticism, McMeel, Construction (2017) 15.08 to 15.50.

27  [1893] AC 540, 545 (PC); cited by Lord Hobhouse in Shogun Finance Ltd v Hudson [2003] UKHL 62, [2004] 1 AC 919, 954, 944.

28  Law Commission ‘The Parol Evidence Rule’, 2.10, 2.11.

29  In Masquerade Music Ltd v Springsteen [2001] EWCA Civ 513, [2001] CPLR 369, [2001] EMLR 654 this rule was declared to have disappeared from English civil law.

30  For example, a mortgage rather than a conveyance; Law Commission ‘The Parol Evidence Rule’, 12-106 to 12-113, 12-122, 12-123.

32  [2019] EWCA 344, [2020] QB 284 at [73] (Flaux LJ).

33  [2017] EWCA Civ 1173, [2017] BCC 611, [2017] 4 Costs LR 781 at [49] to [56] (Hamblen LJ, Briggs LJ agreeing, reversing the first instance judge on this point).

34  [2003] UKHL 62; [2004] 1 AC 919, 954.

35  Phipson on Evidence, 42-13.

36  McMeel, Construction (2017) 15-08 ff; Law Commission, ‘The Parol Evidence Rule’; Chitty (2018) 13-111 and 13-112; K Wedderburn ‘Collateral Contracts’ [1959] CLJ 58.

37  Treitel (2020) 6-022.

38  Stevens, ‘Objectivity, Mistake and the Parol Evidence Rule’ in Burrows and Peel (eds), Contract Terms, 107.

39  DW Greig, ‘Condition or Warranty?’ (1971) 87 LQR 179; Lewison, Interpretation (2020) 3.15; FA Paterson, Collateral Warranties Explained (RIBA Publications 1991); Wedderburn ‘Collateral Contracts’; R Zakrzewski, ‘Representations and Warranties Distinguished’ (2013) 28 JIBFL 341 (on which K Loi, ‘Pre-contractual Misrepresentation: Mistaken Belief Induced by Mis-Statements’ [2017] JBL 598, 609).

40  [1957] 1 WLR 370 (CA).

41  Lord Denning MR, ibid, at 376–77; the dissent by Morris LJ on these facts is perplexing.

42  [1913] AC 30 (HL).

43  ibid, 37–39.

44  ibid, 47.

45  [1978] QB 574, 583 (CA).

46  Thake v Maurice [1986] QB 644 (CA).

47  (1861) 10 CB (NS) 844.

48  [1959] Ch 129.

49  ibid, 145–46.

50  [1991] 1 QB 564 (CA).

51  [1965] 1 WLR 623 (CA).

52  [2019] EWHC 2892 (QB) at [34] to [66], [71] to [101], [161] to [168] (Cavanagh J).

53  [1957] 1 WLR 370 (CA).

54  [1947] Lloyd’s Rep 286 (Lord Goddard CJ).

55  [1913] 2 IR 64 (HL).

56  [2007] EWCA Civ 622, [2007] L & TR 26 at [23].

57  ibid, at [23]; the Court of Appeal in the Business Environment case adopted Lightman J’s statement in Inntrepreneur Pub Company Ltd v East Crown Ltd [2000] 2 Lloyd’s Rep 611, 615; the Court of Appeal in the Business Environment case also noted the following: Henderson v Arthur [1907] 1 KB 10 (CA), City & Westminster Properties (1934) Ltd v Mudd [1959] 1 Ch 129 (Harman J) and Brikom Investments v Carr [1979] 1 QB 467 (CA).

58  [2007] EWCA Civ 622, [2007] L & TR 26 at [23] (Morritt C), quoting Lightman J in Inntrepreneur Pub Company Ltd v East Crown Ltd [2000] 2 Lloyd’s Rep 611, 615.

59  [2017] EWHC 2624 (Ch), [2018] Bus LR 752 at [44] to [80] (Daniel Alexander QC), at a summary judgment hearing.

60  [2019] EWHC 2892 (QB) at [64] and [65] (Cavanagh J), noting the following cases on collateral warranties: Brown v Sheen and Richmond Car Sales, Ltd [1950] 1 All ER 1102 (Jones J), and Shanklin Pier v Detel Products Ltd [1951] 2 KB 854 (McNair J) (collateral contract between paint supplier and pier-owner that the paint would have the specified durability); Andrews v Hopkinson [1957] 1 QB 229 (McNair J); Yeoman Credit v Odgers Vospers Motor House Plymouth (Third Party) [1962] 1 WLR 215 (CA); Wells (Merstham) Ltd v Buckland Sand and Silica Ltd [1965] 2 QB 170 (Davies J); Fuji Seal Europe Ltd v Catalytic Combustion Corporation [2005] EWHC 1659 (TCC), 102 Con LR 47 at [149] to [158] (Jackson J).

61  [2007] EWCA Civ 622, [2007] L & TR 26.

62  In the Business Environment case Morritt C noted, ibid, at [43] that collateral contracts are hard to substantiate in this commercial property context; May LJ at [57], emphasized that a final written agreement, such as a formal lease, is deemed to be exhaustive; Lloyd LJ noted at [61] the intrinsic fluidity of such negotiations.

63  [2012] EWHC 1600 (QB).

64  [1976] 1 WLR 1078, 1081 (CA).

65  [1976] QB 801 (CA).

66  ibid, 818.

67  [2003] UKHL 12, [2004] 1 AC 715 at [183].

68  [2016] EWCA Civ 496, [2017] 1 All ER 942 (noted, Lewison, Interpretation (2020), 9.13); reversing Teare J, [2015] 2 All ER (Comm) 224. The following passages in Hamblen LJ’s judgment are important: (i) the factual matrix: [2016] EWCA Civ 496 at [25] and [29]; (ii) the process of identifying and then dealing with inconsistency, including the presence of an ‘inconsistency clause’: see [30] to [38] (considering Pagnan SpA v Tradax Ocean Transportation SA [1987] 3 All ER 565, CA); (iii) the need to consider the core understanding of the contract’s subject matter and whether the ‘non-bespoke’ terms contradict or derogate from it: [2016] EWCA Civ 496 at [45] to [47], noting Glynn v Margetson & Co [1893] AC 351 (HL); (iv) [2016] EWCA Civ 496 at [50] to [71], notably at [66] and [69], where Hamblen LJ concluded that the borrower’s construction should prevail, not only because the ‘inconsistency clause’ itself pointed in that direction, by prioritising the terms of the loan offer, but because the ‘non-bespoke’ terms had the effect of directly undercutting the essence of the contract’s subject-matter, having regard to its central description and the factual matrix; (v) at [78] to [89], notably [80] to [83], Hamblen LJ demolished the lender’s contention that the ‘non-bespoke’ clause (clause 14) prevailed so as to give the lender the unilateral right to terminate the loan on one month’s notice.

69  [2017] EWHC 3173 (TCC), 176 Con LR 40, [2018] BLR 81 at [11], and see [12] and [31].

70  [1987] 3 All ER 565 (CA).

71  (1) Generally: Chitty (2018) 13-008 ff; Lewison, Interpretation (2020) 3.11, 3.12, 3.13; McMeel, Construction (2017) ch 15; see also: HG Beale, ‘Exclusion and Limitation Clauses in Business Contracts: Transparency’ in AS Burrows and E Peel (eds), Contract Terms (OUP 2007) 193, 199–204; McLaughlan, ‘The Entire Agreement Clause … ’; J Morgan, Great Debates in Contract Law (3rd edn, Palgrave Publishing 2020) 75–79; JR Spencer, ‘Signature, Consent and the Rule in L’Estrange v Graucob’ [1973] CLJ 103; for discussion in the High Court of Australia, Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 55; (2004] 211 ALR 342; and in Equuscorp Pty Ltd v Glengallen Investments Pty Ltd [2004] HCA 55; (2004) ALJR 206; noted, E Peden and J Carter, ‘Incorporation of Terms by Signature: L’Estrange Rules!’ (2005) 21 JCL 96; McMeel, Construction, 15.66s; for Singaporean discussion, SA Booysen [2013] LMCLQ 21. (2) On incorporation of arbitration clauses or jurisdiction clauses, see D Joseph, Jurisdiction and Arbitration Agreements and their Enforcement (3rd edn, Sweet and Maxwell 2015) ch 5; on Sukman Ltd v Commonwealth Secretariat [2007] EWCA Civ 243, [2007] 3 All ER 342, [2007] 2 Lloyd’s Rep 87 (incorporation into an arbitration agreement of a clause excluding appeal from the arbitration), Neil Andrews, Arbitration and Contract Law (Springer Publishing 2016) 8.26. And, for a case where there was confusion, the incorporating clause referring inaccurately to an arbitration clause, whereas the document to be incorporated contained a jurisdiction clause, see Caresse Navigation Ltd v Office National de l’Electricité (‘The Channel Ranger’) [2014] EWCA Civ 1366, [2015] QB 366 (noted, F Chan (2015) 131 LQR 372; and Y Baetz, ‘Should third parties be bound by arbitration clauses in bills of exchange?’ [2015] LMCLQ 85, 92–95).

72  British Road Services Ltd v Arthur v Crutchley & Co Ltd [1968] 1 All ER 811 (CA); Hamad M Aldrees & Partners v Rotex Europe Ltd [2019] EWHC 574 (TCC), 184 Con LR 145 at [162] to [181] (Edwards-Stuart J); Chitty (2018) 13-011; Lewison, Interpretation (2020) 3.13; McMeel, Construction (2017) 15.72 to 15.81; E MacDonald, ‘Incorporation of Contract Terms by a Consistent Course of Dealing’ (1988) 8 LS 48.

73  British Crane Hire Corporation Ltd v Ipswich Plant Hire Ltd [1975] QB 303 (CA); McMeel, Construction (2017) 15.82, 15.83).

74  On the extensive case law, Lewison, Interpretation (2020) 3.10; Phipson on Evidence, 40-42 to 40-44; for shorter statements, McMeel, Construction (2017) 15.84 to 15.87; M Furmston (gen ed), The Law of Contract (6th edn, LexisNexis 2017) 3.17. For an example of a dispute concerning which version of the parties’ shifting ‘terms and conditions’ had been incorporated by an express incorporation to undated ‘terms and conditions’, see Arcadis Consulting (UK) Ltd v AMEC (BCS) Ltd [2018] EWCA Civ 2222, [2019] BLR 27, 181 Con LR 1. In that case the court was required to determine which set of ‘terms and conditions’ had been expressly incorporated, the relevant terms having proved to be a moving target in that case.

75  [2019] EWHC 574 (TCC), 184 Con LR 145 at [162] to [181].

76  [1940] 1 KB 532 (CA).

77  [1951] 1 KB 805, 809 (CA).

78  [1996] CLC 1 (CA); McMeel, Construction (2017) 15.58 to 15.61.

79  [2006] EWCA Civ 386, [2006] 1 CLC 582.

80  Redgrave v Hurd (1881) 20 Ch D 1 (CA): see [11.58], proposition (2)

81  [1949] 1 KB 532 (CA); see also Lewison, Interpretation (2020) 12.10.

82  [1971] 2 QB 163 (CA). See also Grogan v Robin Meredith Plant Hire [1996] CLC 1 (CA); McMeel, Construction (2017) 15.58 to 15.61; see also McMeel, 15.69 to 15.71, suggesting relaxation of the timing point in the modern era, now that the Unfair Contract Terms Act 1977 is potentially available as a statutory source of regulation.

83  There is ample discussion of this point in Lewison, Interpretation (2020) 3.12 and in McMeel, Construction (2017) 15.90 to 15.103.

84  [1989] QB 433 (CA); noted, E MacDonald, (1988) JBL 375.

85  (1877) 2 CPD 416, 423 (CA).

86  [1971] 2 QB 163, 171–72 (CA).

87  [1989] QB 433, 445–46 (CA); on the penalty jurisdiction [27.69]: Cavendish Square Holdings BV v Makdessi [2015] UKSC 67, [2016] AC 1172; R Halson, Liquidated Damages and Penalty Clauses (OUP 2018).

88  [1989] QB 433, 445–46 (CA).

89  ibid, 438–39.

90  Parker v South Eastern Railway Co (1877) 2 CPD 416, 423 (CA) (summarized at [17.61] above); O’Brien v MGN Ltd [2001] EWCA Civ 1279; The Times, 8 August 2001, [2002] CLC 33; L’Estrange v F Graucob Ltd [1934] 2 KB 394 (Div Ct) (on that case see also JR Spencer, ‘Signature, Consent and the Rule in L’Estrange v Graucob’ [1973] CLJ 104; McLaughlan, ‘The Entire Agreement Clause … ’, 531–53); Olley v Marlborough Court Ltd [1949] 1 KB 532 (CA); Thornton v Shoe Lane Parking [1971] 2 QB 163 (CA); Chapelton v Barry UDC [1940] 1 KB 532 (CA); British Crane Hire Corporation Ltd v Ipswich Plant Hire Ltd [1975] QB 303 (CA); McCutcheon v David MacBrayne Ltd [1964] 1 WLR 125 (HL); Tekdata Intercommunications v Amphenol Ltd [2009] EWCA Civ 1209, [2010] 1 Lloyd’s Rep 357 (‘battle of the forms’).

91  Goodlife Foods v Hall Fire Protection Ltd [2018] EWCA Civ 1371, [2018] BLR 491, suggesting that an exclusion clause is not per se an onerous or unusual term; and there is a careful review of the modern authorities by Fraser J in Bates v Post Office (No 3: Common Issues) [2019] EWHC 606 (QB) at [957] to [982]; Hamad M Aldrees & Partners v Rotex Europe Ltd [2019] EWHC 574 (TCC), 184 Con LR 145 at [162] to [181], where Edwards-Stuart J examined the case law authorities concerning incorporation by reference and the relevance of a course of dealing; but on the facts it was held that the relevant terms had not been appended at the crucial stage, and so they had not been incorporated; on the nature of a ‘course of dealing’, MacDonald, ‘Incorporation of Contract Terms by a Consistent Course of Dealing’; Cargill International Trading Pte Ltd v Uttam Galva Steels Ltd [2019] EWHC 476 (Comm) at [81] ff (Bryan J).

92  [1989] QB 433, 439 (CA).

93  ibid, 444.

94  ibid, 445.

95  The adverbs ‘particularly’ and ‘extremely’, qualifying the adjectives ‘onerous and unusual’, recur in AEG (UK) Ltd v Logic Resource Ltd [1996] CLC 265, 269–5, 277 (CA). See also HIH Casualty & General Insurance Ltd v New Hampshire Insurance Co [2001] EWCA Civ 735, [2001] 2 All ER (Comm) 39 at [211] (Rix LJ); Gloster J in JP Morgan Chase Bank v Springwell Navigation Corp [2008] EWHC 1186 at [578] ff (affirmed [2010] EWCA Civ 1221, [2010] 2 CLC 705).

96  [1996] CLC 265, 276–77 (CA).

97  [1989] QB 433, 438 (CA).

98  [1956] 1 WLR 461, 466 (CA).

99  [1996] CLC 265 (CA).

100  ibid, 279.

101  ibid.

102  [2018] EWCA Civ 1371, [2018] BLR 491 at [33] to [37] and [46] to [48] (Coulson LJ).

103  On that issue, ibid, at [108] and [109] (Gross LJ).

104  ibid, at [18].

105  ibid, at [2].

106  ibid, at [13].

107  ibid, at [19] (Coulson LJ).

108  [2018] EWCA Civ 1371, [2018] BLR 491 at [29] to [38], [45] to [48], [53] to [55] (Coulson LJ); see also [101], [107] (Gross LJ); Moylan LJ agreed with both judgments.

109  ibid, at [35].

110  [1934] 2 KB 394 (Div Ct).

111  [2006] EWCA Civ 386, [2006] 1 CLC 582 at [43].

112  [1934] 2 KB 394 (Div Ct).

113  ibid, 405–06 (Maugham LJ).

114  [1951] 1 KB 805 (CA).

115  [2019] EWHC 2809 (QB), [2020] 1 WLR 2809 (Saini J; reversing Master McCloud).

116  For literature on this type of funding agreement, Bibliography, Part II, section (27).

117  This point was addressed by Saini J in the Higgins case at [75] to [86].

118  [2019] EWHC 2809 (QB), [2020] 1 WLR 2809 (see the text above), noting that the signature rule applies even to a clause of an ‘onerous or unusual nature’.

119  Rix LJ expressed an orthodox refusal to admit a more liberal approach, in HIH Casualty and General Insurance Ltd v New Hampshire Insurance Co [2001] EWCA Civ 735, [2001] 2 All ER (Comm) 39, [2001] CLC 1480, [2001] 2 Lloyd’s Rep 161 at [209], see also [190]; there is further support for this orthodoxy: see Rimer J in Peninsula Business Services Ltd v Sweeney [2004] IRLR 49 at [22] to [25]; Mance LJ in the English Court of Appeal in Amiri Flight Authority v BAE Systems plc [2003] EWCA Civ 1447, [2004] 1 All ER (Comm) 385, [2003] 2 Lloyd’s Rep 767 at [14] to [16] (exclusion clause incorporated by signature; business deal between non-consumers; the signatory had not been rushed into signing and had been able to consider the document overnight); McMeel, Construction (2017) 15.107; and see copious citation in Chitty (2018), 2nd supplement 2020, 13-015 fn 71m.

120  His judgment appears at the end of the electronic report of the Court of Appeal’s judgment: [2016] EWCA Civ 96, [2016] 2 BCLC 59; at [37], Tomlinson LJ considered that the party’s signature here clearly indicated assent. Judge Havelock-Allan QC, at first instance at [102], cited Andrew Popplewell QC (as he then was) in Do-Buy 925 Ltd v National Westminster Bank plc [2010] EWHC 2862 (QB) at [90] to [92], which contains a summary of the various dicta in this field.

121  There are some wide, but inconclusive, dicta of Evans LJ in Ocean Chemical Transport Inc v Exnor Craggs [2000] 1 All ER (Comm) 519, [2000] 1 Lloyd’s Rep 446 (CA) at [48] and [49]. But Evans LJ’s comments are distinctly agnostic and undeveloped (Evans LJ’s remarks were not regarded by Rimer J as having changed the law: Peninsula Business Services Ltd v Sweeney [2004] IRLR 49 at [24]).

122  Jaques v Lloyd D George and Partners [1968] 1 WLR 625, 630 (CA), Denning LJ spoke of a positive duty to explain the terms of the standard form which is to be signed (Leon Brittan, later Home Secretary, was counsel for the estate agent in this case). But this was a minority view. Edmund-Davies LJ found that the estate agent had made a misrepresentation, and that point (although not pleaded) had also been Lord Denning MR’s actual ground of decision. The third member of the Court of Appeal, Cairns J (sic) regarded the terms as ambiguous. Although the Jaques case did not concern a consumer, the client was scarcely a sophisticated businessman (like Miss L’Estrange, Jaques ran a small café premises). Furthermore, estate agency contracts are now subject to special documentary regulation: see Devani v Wells [2019] UKSC 4, [2020] AC 129; noted, Paul S Davies [2019] CLJ 267; T Pilkington and J Eldridge (2019) 135 LQR 526; JL Yap (2020) 31 ICCLR 81.

123  McMeel, Construction (2017) 15.107 also notes Denning LJ’s earlier remarks in Curtis v Chemical Cleaning and Dyeing [1951] 1 KB 805, 809 (CA). However, it is submitted that Denning LJ was there remaining faithful to orthodoxy.

124  [1934] 2 KB 394 (Div Ct).

125  (1978) 83 DLR (3d) 400; 18 OR (2d) 601; approving Spencer, ‘Signature, Consent and the Rule in L’Estrange v Graucob’, 114–16. On this case, SM Waddams, The Law of Contracts (7th edn, Thomson Reuters 2017) [349].

126  McMeel, Construction (2017) 15.104 ff.