A clause in a subcontract for painting submarines said that the contractor's standard terms and conditions were incorporated. The clause also said that a copy of the terms was on the reverse of the purchase order. Clause 18 of the terms was an arbitration clause but there was a problem. The copy of the purchase order sent to the subcontractor did not have the terms on the back. So did the arbitration clause apply?
The court ruled that it did. A reasonable person reading the subcontract clause would have no doubt that the standard terms were incorporated. The fact that they were not on the back of the purchase order did not affect this. It would, at all times, have been open to the subcontractor to request a copy of the terms.
Another subcontract clause said that the main contract terms were incorporated (unless inconsistent) and clause 19.05 of that main contract provided for arbitration, under the main contract, of subcontract disputes that were substantially the same as, or connected with, issues under the main contract. Clear words are required to incorporate terms in a contract between different parties so was clause 19.05 also incorporated? Since significant modifications would be required to incorporate it and it was not easy to see how it could be adapted without doing significant violence to the wording, in the court's view the subcontract clause wording was insufficiently clear to incorporate the main contract arbitration clause.