The perils of e mail: standard terms in the IH

The Inner House has decided an interesting case on the incorporation of standard terms and on contract formation generally.  The case is Baillie Estates Ltd v Du Pont (UK) Ltd [2009] CSOH 95, decided by Lords Clarke, Carloway and Sir David Edward QC, with Lord Clarke delivering the opinion of the court.

The case concerned the sale of a large printing machine.  The parties communicated by e mail, discussing the terms and conditions of the potential purchase.  Those e mails covered the price, a payment schedule, a target installation date, and other issues such as the supply of printing ink.  At this stage a representative of the buyer sent what Lord Hodge, the Lord Ordinary, had described as a "terse message" comprising only the words "Go ahead."  In response, the seller replied "It's on the way."  The following day, the seller sent to the buyer by e mail a copy of the seller's standard trading terms and conditions.  

The Inner House considered the nature of the e mail communications, concluding [para 25]:

"There was nothing informal or ambiguous, in our view, in the proposal.  The brevity of the response thereto, that is "go ahead", (particularly standing the previous dealings between the parties) did not, in our judgment, bring with it any ambiguity.  It was a totally apt communication of an acceptance of the proposal.  As noted, the reclaimers attempted to make something of the informality of the language employed but there is no requirement for formality of language in a contract of this sort and commercial contracts are regularly concluded in a similar way, particularly where the parties have been in detailed discussion and negotiations beforehand.  Accordingly, we are of the clear view that the communings of the parties of the 17 November were capable of amounting to a concluded unconditional contract between them for the sale and purchase of the printer and that, moreover, in choosing to use the language they did, against the background in which it was used, the parties, looking at matters objectively, must be held to have intended to have reached a binding and concluded agreement by those communings."

Thus, informality of communication in itself is no bar to formation, particularly when considered against the backdrop of a course of dealing between the parties. 

Counsel for the sellers had argued that there was a shared understanding between the parties firstly, that the seller's standard conditions would prevail and secondly that the bargain would be conditional on a site survey and credit check.  This argument was unsuccessful, Lord Clarke noting [para [26]]: "Assumptions, beliefs or understanding do not, by themselves, translate into contractual rights and obligations."

The terms could, Lord Clarke indicated, have been incorporated where the buyer had remained silent on the basis of acquiescence, but this could only be the case where the seller had proposed that they should form part of the contract before the contract was concluded [para [27]].  The issue of standard terms arising only after conclusion in this case, the argument based on acquiescence failed.  Their Lordships refused the seller's reclaiming motion.

An object lesson, if one were needed, on the perils of sending an e mail message too quickly, and without considering the legal consequences.