"Standard Terms & Conditions Apply" ' A Salutary Lesson About Incorporation Into A Contract And Reasonableness Under UCTA 1977

• Published date: 30 August 2021
• Subject Matter: Corporate/Commercial Law, Corporate and Company Law, Contracts and Commercial Law
• Law Firm: Mills & Reeve
• Author: Mr Mark Davison

Mark Davison looks at the operation of T&Cs in business to business contracts as illustrated by the recent case of Phoenix Interior Design Ltd v Henley Homes Plc & Union Street Holdings Ltd.

The recent decision in Phoenix Interior Design Ltd v Henley Homes Plc & Union Street Holdings Ltd provides a useful example of where issues can arise about ensuring standard terms and conditions are incorporated into a contract and whether the terms are sufficiently reasonable. Whilst it does not change the law in this area, it does provide a salutary lesson about taking care in how businesses operate their T&Cs in business to business agreements.

The claimant was contracted to perform interior design services for the defendants' hotel. The relationship deteriorated and the works were not completed and the defendants did not pay the total price due under the agreement. The claimant issued invoices although the defendants' position was that the last 50 per cent of the amounts due under the agreement was payable on completion or alternatively the works were defective and they were therefore entitled to damages. The claimant sought to rely on its T&Cs to refute this.

In order to decide the issue, the court needed to determine whether:

1. the claimant's T&Cs were incorporated into the agreement; and if so
2. whether the term the claimant relied upon satisfied the requirement of reasonableness under the Unfair Contract Terms Act 1977 ("UCTA 1977").

Background to the dispute

In February 2015, the claimant presented its proposed designs to the defendants. The claimant maintains that printed copies of its T&Cs were made available to the defendants at the presentation. There was then a delay in discussions regarding the project. But on 6 January 2016, the claimant sent a proposal by email stating that it showed "the breakdown for each apartment as requested along with our standard terms and conditions." The terms and conditions were not contained with the proposal but were instead attached as a separate document to the same email.

On 5 February 2016, the claimant sent a revised proposal summary which stated that "Accepted purchase/rental contracts are subject to terms and conditions overleaf". However, no T&Cs were "overleaf" nor were they provided separately to the defendants. The defendants proceeded to sign the revised proposal summary.

In June 2016, the agreement was amended further and the agreement stated again that it was "subject to terms and conditions overleaf". The...