If two parties have been dealing with each other regularly for
over 10 years, are they considered to have notice of the terms and
conditions on the back of the invoices? This was the issue before
the WA Court of Appeal in La Rosa v Nudrill Pty Ltd, which
highlights the dangers of not providing the terms of your contract
to the other party before the services are delivered.
Mr La Rosa ran a transport business and Nudrill was a
longstanding client. The arrangement between the two, over a period
of over 10 years, was that Nudrill would phone Mr La Rosa and book
the transport services. Following the transport of the cargo, Mr La
Rosa would send an invoice that contained terms and conditions on
In this case, following a telephone order of the services, Mr La
Rosa transported Nudrill's drill rig but damaged it when it
fell off because of Mr La Rosa's negligence in driving the
vehicle at excessive speed.
Mr La Rosa argued that the exclusion clause on the back of the
invoices that he provided to Nudrill stating that "all goods
are handled, lifted or carried at the owner's risk" meant
that he was not liable for the damage.
The key issue was whether the parties, by their past conduct,
had incorporated the exclusion clause into the contract.
Buss JA held that there is no single test for determining
whether a term is incorporated into a contract as a result of prior
dealings. He stated that it will be a "question of fact and
degree" in each case based on the prior conduct of the parties
as a whole.
Buss JA discussed several factors that are relevant to the court
in determining whether a term was incorporated into a contract,
noting that this was not an exhaustive list, including:
the number of prior dealings
how recent the prior dealings were, and
the consistency between the prior conduct and the dealing in
The Court of Appeal unanimously held that the receipt of
invoices by Nudrill was, in these circumstances, not sufficient to
justify an inference that it had accepted or was willing to be
bound by the terms printed on the back of the invoices.
Of particular relevance to the Court of Appeal was:
there was no evidence that Nudrill had actually read the terms,
it was reasonable for a person to regard the invoice as simply
a request for payment rather than a document containing contractual
terms governing the transaction that had already occurred.
This case highlights the danger of contracting to provide
services without having explicitly agreed the terms and conditions
of the contract, especially dangerous when negotiating an oral
contract. The fact that a person has contracted with you before
does not mean that a term will always be incorporated into a
contract because of the prior dealings.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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We discuss whether certain clauses commonly found in ordinary commercial contracts could be considered to be penalties.
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