Cancellation fee not effectively incorporated into contract

The High Court has held that a supplier’s standard terms and conditions were incorporated by reference when the customer signed an electronic order form, but that an onerous and unfair cancellation fee could not be enforced against the customer as it was not effectively incorporated into the contract.

In Blu-Sky Solutions Ltd v Be Caring Ltd [2021] EWHC 2619 (Comm), the supplier sent an electronic order form to its customer stating that all orders and contracts were subject to its standard terms and conditions set out on its website.  The customer signed the order form but later withdrew its order.  The supplier sought to enforce a cancellation fee payable under its standard terms and conditions but its customer argued that the clauses relied upon by the supplier were sufficiently unusual and onerous that they should have been brought to its attention fairly and reasonably by the supplier.

It was held that while the supplier’s standard terms and conditions had been effectively incorporated into the contractual relationship between the parties by reference, the clauses relied upon were not incorporated because, given they were unduly onerous, they should have fairly and reasonably been brought to the customer’s attention.

The decision makes it clear that where a signed contract incorporates terms by reference, where the terms are unduly onerous they need to be brought to the specific attention of the signing party.

For advice on contractual matters, including effective incorporation strategies, please Christopher Buck, Associate Partner and Solicitor, on 01908 660966 / 01604 828282 or by email at Christopher.Buck@franklins-sols.co.uk.