High Court considers whether onerous term in standard terms incorporated by reference

The High Court has held that, while a claimant’s standard terms were incorporated by reference into a signed contract, a term that required the defendant to pay cancellation fees was not incorporated as it was onerous and the claimant had not done enough to draw the defendant’s attention to it: Blu-Sky Solutions Ltd v Be Caring Ltd [2021] EWHC 2619 (Comm).

Although set in a non-financial context, the decision will be of interest to financial institutions as it serves as a reminder that clauses within standard terms which impose burdensome obligations should be made obvious to the counter-party prior to contracting. That will be even more important where the standard terms are incorporated by reference, rather than being contained in the signed contract itself.

In the present case, the defendant, by signing a purchase order form, acknowledged that it had accessed and read the standard terms and conditions on the claimant’s website, even though in reality it had done neither. The court commented that the offending clause was “cunningly concealed in the middle of a dense thicket which none but the most dedicated could have been expected to discover and extricate…”. In the circumstances, the court was satisfied that it had not been incorporated into the contract.

For a more detailed discussion of the decision, please see our litigation blog post.