Keep paperwork current to avoid costly court case
up-to-date makes good business sense
by business editor Trevor Sturgess
Making sure a business’ standard terms are incorporated within
signed agreements, are up to date and clearly printed on all key
trading documents – plus good record keeping – could help
businesses avoid expensive court cases, according to Kent legal
specialists Vertex Law.
The Kings Hill-based team is issuing the advice after a recent
High Court case in which a company faced a claim for up to £7m in
liability for negligence or breach of contract.
In Allen Fabrications Ltd v ASD Ltd, it was alleged that the
defendant, ASD, failed to deliver a sufficient number of fixings
required to secure a metal grating safely or to warn the claimant,
Allen Fabrications, that additional fixings could be needed.
The court had to consider whether ASD’s standard terms were
incorporated into the agreement with Allen Fabrications without the
paperwork available as evidence.
Sonel Martin, of the Vertex Law commercial team and pictured
below, said: “This case, and associated legal costs, could have
been greatly simplified or prevented by good record keeping and
essential corporate stationery auditing and updating.
“The judge found that in order to get goods on credit from ASD,
Allen Fabrications must have submitted a signed credit application
form which incorporated ASD’s terms into all subsequent
“ASD was not able to produce this form from its records. If it
had been able to the trial and all associated costs may have been
“Furthermore, lack of retained or properly presented
paperwork associated with the transactions between the two
companies complicated the hearings and so inevitably added to the
“For example, ASD pleaded that its standard terms were printed
on the back of all its invoices. However, it turned out they were
not. Not only did ASD have to withdraw this allegation but it led
to the claimant suggesting the terms may not have been printed on
the back of advice notes either.”
The judge also considered whether, had he found that there had
been no signed agreement between the parties, the specific clause
limiting ASD’s liability would have been considered so onerous, or
unusual, as to require ASD to draw them specifically to the
attention of Allen Fabrications.
“The judge commented that an exclusion or limitation clause is
not automatically onerous and that terms in very common use between
two commercial parties had to be seen in context. There is no
requirement for special notice where the other party is, in general
terms, aware of the existence of the term or that the document
contained or is likely to contain the onerous term, even if the
term has not been read,” said Ms Martin.
“He noted that Allen Fabrications was a commercial customer who
had a well-established previous course of dealing with ASD and
would have seen their standard terms many times previously. This
was sufficient for the limitation clause to be enforceable.
“This case highlights the need for businesses, and in particular
their sales and purchasing teams, to have proper procedures in
"They need to ensure that their standard terms and conditions
are properly incorporated into their contractual relationships,
whether by express statement of the terms in the contract or by
express reference to them within as much pre-contract and
contractual documentation as possible, such as quotations and
confirmation of purchase orders, before the contract is made, and
that copies are kept.”
Vertex Law’s commercial team can be contacted at www.vertexlaw.co.uk.