A recent unreported case involving "Britain's largest bull-based stud" serves as a timely reminder that the sheet full of eight-point text, that so often goes unprinted or unread, needs to be scrutinized carefully if the otherwise hapless customer is to stand any prospect of maintaining an action against a supplier that doesn't live up to its promise. Such actions are most frequently brought for defective goods or services either under the Sale of Goods Act 1979 or the Supply of Goods and Services Act 1983.
In this case, four farmers brought proceedings against Cogent UK Ltd because between them they had bought over 400 "measures" of semen from apparently potent bull Tamhorn Rocket. The semen comes pre-packed in "straws", having been stored in liquid nitrogen. The precise facts are unclear from the information available, but the result appears to have been that the resultant progeny was somewhat less than expected, which effectively left the farmers having paid for a "product" that did not live up to its expectations. It is understood that the contract contained a term excluding liability on the part of Cogent where use of the straws did not result in calves.
Two of the four farmers had not been shown Cogent's terms of business, whereas the remaining two were deemed to have been aware of the terms and conditions by virtue of having been regular customers, and this proved to make the difference in court between judgment in their favour and a very large bill for the other side's legal fees.
As in this case (and notwithstanding the effect of the Unfair Contract Terms Act 1977), a business such as Cogent may be able to convince a court that its standard terms have been incorporated into a contract between the parties under which the defective semen was sold. This happened in the case of two of the four farmers in the proceedings. The incorporation would have taken place as part of a course of dealing between the parties. To satisfy this principle of "course of dealing", the court must be satisfied that, as a result of the term's consistent use in previous transactions, the reasonable expectation of the parties involved is that the term will apply to the current transaction.
The party seeking to establish the course of dealing must show that there has been regular trading between the parties and the trading has been consistent (ie, the terms have been consistent and the procedure followed has been the same each time), and it is likely that Cogent "got home" on this basis. The result is a seemingly unfair (if legally correct) judgment, where out of four claimants - who appear to have suffered identical proportions of loss and who are probably equally unlikely to read the supplier's terms of business - only two can be successful.
While many outside the legal profession assume that a contract is nothing more than a lawyer's exercise, it does contain the basis on which the parties have agreed to deal with each other, and those who enter into valuable contracts (either as suppliers or customers) should be encouraged to examine them with care and seek advice where necessary. In general if the standard terms are printed on the reverse of a document, the document should state this on the face of it as well as state that the sale/purchase is made on the terms and they form part of the contract. If it is an unusual standard term, particular notice should be drawn to it by the party wishing to rely on it - burying it in the small print is not an option.
(A version of this article by Simon Blackburn first appeared in the Solicitors Journal 17 May 2011).