Due to a number of recent developments, now is a good time to review the terms and conditions used in the course of your business. Set out below are details of recent developments which may affect such terms and conditions.
Retention of Title
Following the decision of the High Court in Bulbinder Singh Sandhu v Jet Star Retail Limited [2010] EWHC B17 (Mercantile) it is important to review each retention of title clause to ensure that it reflects the commercial reality of the arrangements between the parties.
In the above case, it was held that an “all monies” retention of title clause was ineffective because it failed to take into account that the goods were unlikely to be paid for before being resold.
Glovers Comment: Suppliers of goods should review their retention of title clause to ensure it reflects the commercial reality of the relationship with a purchaser. Generally an “all monies” provision will not protect the seller in the event of the insolvency of a purchaser. It is also important to ensure that the clause does not seek to retain title over the proceeds of sale of goods not paid for, as this may be deemed to be a floating charge which would be void for lack of registration.
Set-Off Rights
Following the decision of the Court of Appeal in Axa Sun Life Services Plc v Campbell Martin Ltd ([2011] EWCA Civ 1330) provisions which exclude a customer’s right of set off but preserve a supplier’s should be reconsidered.
Glovers Comment: In the Axa Sun Life case it was held that a clause which excludes one party’s right to set-off only without providing an explanation for the different treatment is unenforceable. In order for a set-off provision to be enforceable a seller must provide an explanation for the discrepancy.
Exclusion of Liability – Deliberate Breach of Contract
It has previously been thought that there was a rebuttable presumption that a clause excluding liability should not apply in the event of a deliberate repudiatory breach of contract. The decision in Astra Zeneca UK Ltd v Albemarle International Corporation ([2011] EWHC 1574) has reversed this view.
Glovers Comment: Parties to a contract should assume that a clause excluding the liability of either party will still be enforceable (subject to the Unfair Contract Terms Act 1977) if the party seeking to rely on the clause has committed a deliberate repudiatory breach of the contract.
Governing Law and Jurisdiction Clauses
Following the implementation of Rome II (an EU regulation) in 2009, a clause stipulating the law a contract is governed by (for example, the laws of England and Wales) and the jurisdiction in which any disputes will be resolved may not be sufficient to ensure non-contractual disputes are also dealt with under the same governing law.
Glovers Comment: Governing law and jurisdiction clauses should be reviewed to ensure that the jurisdiction under which non-contractual disputes will be dealt with is certain.
Bribery Act 2010
It is now prudent to consider including a provision in terms and conditions enabling termination of the contract if the other party does not comply with the Bribery Act 2010 (the “Act”), you have a reasonable suspicion that it is guilty of any activity which would constitute an offence under the Act or a reasonable suspicion that it is engaging in corrupt or dishonest practices.
Glovers Comments: Terms and Conditions will often give rise to a contract between the parties based on a course of dealing which is terminable on reasonable notice. A suitable provision will enable termination of the contract forthwith if a breach of the Act or corrupt or dishonest practice is reasonably suspected.
Entire Agreement and Non-Reliance Clauses
There have been a number of recent cases in this area. A clause which sets out that an agreement constitutes the entire agreement between the parties will not necessarily prevent the parties relying on pre-contractual representations or statements not expressly referred to in the agreement.
Glovers Comment: A carefully drafted non-reliance clause should prevent reliance on innocent pre-contractual representations but generally a whole agreement clause will not.
Provision of Service Regulations 2009
Under the Provision of Service Regulations 2009, obligations have been imposed on businesses dealing with handling customer complaints and information which must be provided to customers.
Such information includes the legal status of the seller, contact details for rapid communication and for making complaints (such as email, phone or fax) and any general terms and conditions of business.
Glovers Comment: It is important to check the information provided to customers to ensure compliance with the Provision of Service Regulations.
Please note that this information is provided for general knowledge only and therefore specific advice should be sought for individual cases.
For further information, please contact Paul Gilks at or Peter Francis at
