McCrone v Boots Farm Sales Ltd
Court of Session (Outer House)
Citations: 1981 SC 68; 1981 SLT 103;  CLY 3608.
The claimant was a farmer. He orally contracted to buy weed-killer from the defendant. The weed killer failed to stop weeds from damaging the claimant’s crops. The claimant sued for breach of contract. The defendant asserted that the agreement was governed by their General Conditions of Sale. They based this on the fact that the parties had entered into similar contracts many times before and the invoice had always mentioned there General Conditions.
The General Conditions contained an exclusion clause, which the claimant argued was void under s.17 of the Unfair Contract Terms Act 1977. That provision states that:
‘(1) Any term of a contract which is…a standard form contract shall have no effect for the purpose of enabling a party to the contract—(a) who is in breach of a contractual obligation, to exclude or restrict any liability of his to the…customer in respect of the breach…if it was not fair and reasonable to incorporate the term in the contract.
(2) In this section “customer” means a party to a standard form contract who deals on the basis of written standard terms of business of the other party to the contract who himself deals in the course of a business.
The defendant countered that s.3 was inapplicable here, because the General Conditions were not a ‘standard form contract’.
- Was the contract governed by the defendant’s General Conditions of Sale?
- Was the contract a ‘standard form contract’?
The Court held in favour of the claimant. The defendant had failed to properly plead the basis for their argument that the parties had intended to contract on the General Conditions. The Court also concluded that the General Conditions were a standard form contract. Accordingly, if they had been incorporated, they would be subject to s.17 of the Unfair Contract Terms Act 1977.
This Case is Authority For…
Where a party argues that terms are to be implied into an agreement from the fact that in prior similar contracts with the other party, they have invariably issued documents containing these terms, they must prove that:
- Show that each party led the other to reasonably believe that they intended their rights and obligations should be modified in the manner specified in the written document; and
- Clearly demonstrate the subject matter and terms of the prior contracts.
Such an implication is easier to make where the previous transactions are similar.
A ‘standard form contract’ for the purposes of the Unfair Contract Terms Act 1977 can include both wholly written and partly oral contracts. The important consideration was whether the parties intended to be bound by a set of fixed terms or conditions.