The COA recently (24.05.2021) determined that contractual clauses may be incorporated via a weblink.
Factual matrix
The Sales Contract, Terms of Trade and Purchase Order
Open Country Dairy v Able Foods [CIVIL APPEAL NO. W-02(IM)(NCC)-1793-11/2020], involved a claim regarding dairy products. Able Food (AF) had ordered a quantity of dairy products from Open Country (OC).
The manner in which this was done was not disputed. Upon confirmation as to the price and quantity required, OC would send a Sales Contract to AF.
Crucially, each Sales Contract contained a weblink at the bottom, which OC referred to as the “Terms of Trade”.
AF would execute and return the Sales Contract, together with a corresponding Purchase Order. Premised upon this, OC would deliver dairy products to AF.
A delivery goes awry
One particular delivery went awry. It was for a sum of USD4.6m. AF determined that the defective quantity was USD3.4m and issued a demand. This went unanswered. A civil suit was then filed in KLHC, with AF serving out of jurisdiction.
OC enters an appearance
OC entered an appearance and sought to set-aside the leave to serve proceedings out of jurisdiction. OC claimed that by reference to the Terms of Trade, parties had agreed to submit to the exclusive jurisdiction of the NZ Courts.
This application was dismissed by the HCJ.
On appeal, the COA unanimously allowed the appeal and held that jurisdiction to the dispute lay with the courts of New Zealand. This was premised upon the incorporation of the "Terms of Trade" via the web-link on the Sales Contract.
Incorporation of terms via a weblink
AF argued that it had never been provided with a copy of the Terms of Trade beforehand. The only reference to the same was via the weblink on the Sales Contract. The COA noted that “…it was critical for the JC to determine whether the Terms of Trade were incorporated into the contracts for the purchase of IWMP.”
The COA noted that the core issue before them would be “whether the Terms of Trade were incorporated by reference.”
The COA held that the weblink on the Sales Contract would form a part of the terms of the contract:
[67] In our view, the Terms of Trade are to be found in the web-link and they formed part of the contracts for the purchase of IWMP. It is clear that Clause 19.2 of the Terms of Trade dealt with the express choice of jurisdiction i.e. the courts of New Zealand. As we said earlier, the respondent (for whatever reason) did not “click” on or look up the weblink. But that does not mean that the Terms of Trade which are contained in the web-link, do not apply.
[68] The burden was on the respondent to look up the Terms of Trade via the web-link. The failure on the respondent’s part to do so is akin to a contracting party not bothering to avail themselves of the terms, and to read and understand the same, with the benefit of legal advice or otherwise.
The COA noted that even though there was no evidence that AF had accessed the link, that was immaterial. AF was under an obligation to click the link and check the same:
[70] It is important to emphasize that there was no evidence that the respondent had accessed the Terms of Trade via the web-link which had been provided, or had attempted to do so. There is no suggestion by the respondent that it experienced any sort of difficulty in terms of trying to access the web-link. And it is not in dispute that the respondent did not ask for a copy of the Terms of Trade to be furnished or even enquired about them.
[71] If the respondent was indeed oblivious of the Terms of Trade, it was plainly because of its indifference. Having noticed the endorsement and the word “attached”, it chose to ignore the web-link provided. That was necessarily at the respondent’s own peril. The respondent was of the view that the appellant was under a duty or obligation to furnish them with a copy of the Terms of Trade. We disagree. In our view, there was no such duty or obligation as the Terms of Trade were, as the appellant put it, just a “click away”.
[72] Of course, if there was any technical difficulty in downloading the Terms of Trade, then all that the respondent had to do was to ask the appellant and it would have been given the requisite document. But here, throughout the period that the contracts had been entered into for the supply of the IWMP by the appellant, the respondent never asked to be furnished with the Terms of Trade. It was, after all available and accessible via the web-link. The appellant was therefore entitled to assume that the respondent was aware of the contents of the Terms of Trade.
[73] As such, the result is that the respondent was bound by the Terms of Trade as it was already incorporated by reference via the web-link as provided in each Sales Contract that was signed by the respondent.
Outcome
Premised upon the above, the COA allowed the appeal. The COA set-aside the HC’s decision and determined that the NZ Courts had exclusive jurisdiction over the dispute, as agreed-upon by the parties.
Key takeaway
Premised upon this decision, contractual terms may be incorporated into an agreement by virtue of a weblink.
This decision would draw us in-line with the English COA decision of Rooney v CSE Bournemouth [2010] EWCA Civ 1364. Although not specifically discussed in Open Country, the English COA decided that the words “Terms and Conditions available upon request” at the foot of a work-order would allow a contractor to raise, as a defence, the contractor’s standard conditions of trading. As put by the COA:
In the factual context I disagree with the judge's conclusion. He concluded that the words conveyed no more than that terms and conditions were available in the sense that there were terms which might be included at the customer's request. I can see that grammatically the words could be construed that way, but it is not a construction which I would expect to occur to a businessman in the position of the parties. The work order was intended to be sent to the customer for signature as a contractually binding order rather than a form of pre-contractual negotiation. It would also be commercially most odd to have a contract for the performance of services where, instead of it containing any detailed commercial terms, eg as to payment, the contractor devised such terms but left them for inclusion only at the customer's request.
The work order was a contractual document which took its place within the contractual framework of an aircraft maintenance agreement. The prevailing regulatory regime prescribed the technical content of the contracts, but left the parties free to negotiate such commercial terms as they wished. The work order, a signed document, was that which activated work being done under the contract. The document bears the words "Terms and conditions available on request". Given the nature of this contract and an expectation there would be commercial terms, it seems to me that these words must bear some meaning.
One can see how this position would differ in the context of unequal bargaining power (cf. the decision above against Spreadex Ltd v Colin Cochrane [2012] EWHC 1290 (Comm), where the QBD held that a contract between consumer and service-provider would not come into existence on the basis of a weblink “Customer Agreement”).
Conclusion
With the world becoming increasingly borderless (although the coronavirus may have curtailed that somewhat), parties would do well to read all documents and contracts thoroughly. A major concern for AF were the costs associated with engaging solicitors in NZ; the COA noted this but held that that was a risk that they took in the bargain that they had struck.
Caveat emptor.
GAVIN JAYAPAL
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