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templ

Facts[]

Interfoto, at the request of Stiletto, delivered 47 photographic transparencies to Stiletto in a jiffy bag. Stiletto telephoned Interfoto saying there were one or two which they were planning to use in a presentation, but in the event they did not. Stiletto never read Interfoto's standard terms and conditions, which were on a delivery note inside the bag. Condition 2 of the terms said there was a holding fee of £5 for each day over fourteen days. After approximately a month, Interfoto sent a bill for £3,783.50 and after the invoice was refused brought an action against Stiletto. The lower court judge awarded them the amount which Stiletto appealed.

Issue[]

  1. Is a defendant bound by onerous unread terms in a contract?

Decision[]

Appeal allowed, award reduced.

Reasons[]

Dillon remarks that the holding fee of £5/day was too high – exorbitant given the industry standard of ~£3.50/week. He finds that in fact the appellant would have had a strong case for arguing the clause is void as a penalty clause, but that was not argued. The contract formed was thus: the initial phonecall to Interfoto constituted an inquiry, the delivery of the transparencies was an offer, and opening the bag containing the transparencies and the delivery note was acceptance. Due to the onerous nature of condition 2, it had to be brought to the attention of Stiletto which it was not. As a result it does not form part of the contract formed and so he reduces the award based on quantum meruit to the industry standard £3.50/week.

Bingham begins by considering civil law systems and the obligation that parties should act in good faith in such systems, something the common law in England has not done. Instead the law has produced piecemeal solutions as needed. When considering sufficiency of notice cases they can be read on two levels:

  1. contractual analysis - classical, offer and acceptance; and
  2. regime of fairness – moving more towards substantive rather than procedural fairness.

After analyzing the various cases he concludes that one should look to several factors in determining whether one party should be bound:

  1. the nature of the transaction;
  2. the character of the parties;
  3. the sufficiency of the notice/proportionality; and
  4. is it fair to hold them to the condition in question?

Applying this to the case at bar, he holds that the clause was sufficiently onerous that notification was required and thus comes to the same conclusion as Dillon.

Ratio[]

Proportionality is applicable to all clauses (not just exemption clauses) - the more onerous, the more notice required.

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