battle of the forms

Monday, October 24th, 2011

We receive many queries from clients who are asking us ‘Whose contract conditions apply?’ The starting point is often the Excello case. We suspect that the whole of the procurement profession has studied this case, very diligently. The circumstances of each situation needs to be clearly understood before reaching a conclusion. We monitor legal cases and now draw your attention to a case that was reported on the 4th October 2011 from the High Court of Ireland. It is complex and has the interesting dimensions of the battle of the forms, implied terms and custom and practice in an industrial sector. The plaintiff Noreside Construction Ltd had a contract from Dublin City Council and purchased aggregate from Irish Asphalt Ltd. It was later found that the aggregate had Pyrite present. The judge was asked whose terms and conditions applied. The buyer e-mailed a purchase order. The Purchase Order conditions were printed on the reverse but there was no reference to such conditions on the front side of the Purchase Order. The defendent commenced supplying aggregate. For each delivery there was a delivery docket signed on behalf of the defendant and the plaintiff. Each delivery docket stated on its face, at the bottom, “This material is sold subject to the terms and conditions available on request”. The argument over whose conditions applied impacted on liability. Very briefly the Purchase Order conditions held the supplier accountable for all claims, whereas the defendant’s liability was limited to the cost of their replacement. The judge found that neither set of terms and conditions applied. The logic is contained in the judgment. So now the logic moved into implied terms of contract. The list of requirements that must be fulfilled before a custom may be implied are set out in the judgment and the Judge concluded that the evidence adduced by the defendant fell short of establishing a custom of a type which would permit the Court to find that where a contractor operating in the construction industry, such as the plaintiff, enters into a contract with a quarry operator for the supply of aggregate for a construction contract, it could be objectively determined that both parties must be taken to have known of it and intended that it should form part of the contract. The Judge found there is an implied condition of merchantable quality pursuant to s.14(2) of the Sale of Goods Act 1893 as inserted by s.10 of the Sale of Goods and Supply of Service Act 1980. Is this the end of it? No. At paragraph 54 of the judgement, it is stated that “I wish to make it clear that all issues relating to questions as to whether or not the aggregate and stone supplied by the defendant to the plaintiff pursuant to the contract of supply between March 2003 and May 2005 for the  development at the Fingas site was or was not of merchantable quality are matters for the full hearing of the plaintiff’s claim herein”.

If you have a contractual issue contact us and we will find you a solution.