Battle Of The Terms: Court Of Appeal Rules On Conflicting Contract Terms

• Published date: 23 June 2021
• Subject Matter: Corporate/Commercial Law, Litigation, Mediation & Arbitration, Real Estate and Construction, Contracts and Commercial Law, Trials & Appeals & Compensation, Construction & Planning
• Law Firm: Stevens & Bolton
• Author: Ms Lauren Melnyk

A recent Court of Appeal decision in Septo Trading Inc x Tintrade Ltd [2021] EWCA CIV 718 has provided helpful guidance on the approach to inconsistencies between bespoke terms and the terms of standard forms within a given contract.

The issue in this appeal was whether a "certificate of quality" issued by an independent loadport inspector was binding on the parties on matters of quality and prevented the buyer from claiming damages.

The case is of interest to contractors and sub-contractors who often enter into contracts where standard T&C's are bolted on to standard form construction contracts.

Background

The buyer, Septo, claimed for damages arising from alleged defective quality of fuel oil and claimed that the goods were not in accordance with the contract specification. The seller, Tintrade, argued at trial that Septo was precluded from advancing a breach of quality claim by reference to the issued certificate of quality. This certificate declared the product to be within the contractual specification and Septo argued it was contractually binding on the parties.

The contractual terms exchanged between the parties by email (referred to in the judgment as the 'Recap') said that the certificate of quality would be binding on the parties in the absence of fraud or manifest error. However, in addition to the terms in the Recap the parties had also entered into the transaction using standard terms which included the words 'where not in conflict with the above' and also that the certificate would only be binding for invoicing purposes.

Septo argued that as a matter of interpretation, the certificate of quality was not intended to be binding for all purposes, only for invoicing purposes.

Initially, the judge agreed with Septo, finding that the terms could be read together and the certificate of quality was indeed only binding for invoicing purposes. Septo was therefore entitled to bring its claim, and the claim succeeded.

The appeal

Tintade appealed the decision, arguing that the standard terms were not incorporated into the contract because they were in conflict with the content of the Recap. Tintrade argued the certificate of quality would accordingly be binding for all purposes and Septo could not bring its claim. The question was therefore whether or not the terms were inconsistent.

The Court of Appeal agreed unanimously with Tintrade that there was an inconsistency between the...