Member Article

T&C’s: the need to know

Grant Esterhuizen of Lester Aldridge LLP shares his expertise on terms and conditions.

While many businesses trade and rely on their standard terms and conditions, such terms and the process by which they are used can become outdated and inconsistently applied. When was the last time your business reviewed its contracting process?

In the recent case of Allen Fabrications Limited v ASD Limited, the High Court provided an update on the incorporation of standard terms into contracts between two parties. The question considered by the High Court, in Allen Fabrications’ claim for breach of contract, was whether ASD’s standard terms and conditions had been incorporated into its contract with the company.

The Court found that ASD’s standard terms had in fact been incorporated into its contract with Allen Fabrications, because ASD’s standard contracting procedure demonstrated that without a signed document expressly incorporating ASD’s standard terms, no goods or services would be supplied to its customer(s). Neither party could actually produce a copy of a signed document, however the facts of the case pointed towards the fact that such a document must have existed.

The Court ruled that when parties to a contract are commercial organisations with a previous course of dealings, an awareness of the contents of the other’s standard terms and contracting procedure is expected. In this case, the Court deemed that Allen Fabrications was aware of ASD’s standard contracting process and, therefore, that the signed documentation incorporating ASD’s standard terms did exist, even though it was not in either party’s possession.

The case highlights three practical points to consider and action if your business intends on trading on its own standard terms:

1. Choose a method of incorporating your standard terms and conditions and apply this approach consistently when agreeing new contracts;

2. Make your customers aware of your standard contracting process; and

3. Keep copies of all signed contracts, even after contractual obligations have been completed.

This was posted in Bdaily's Members' News section by Grant Esterhuizen .