When you have an ongoing, long standing relationship with a
customer it is easy to assume that your terms and conditions that
were previously issued to that customer are accepted each and every
time. However, a recent case of La Rosa v Nudrill Pty Ltd in the
Western Australian Court of Appeal reinforces the importance of
obtaining acceptance of your terms and conditions of trade from
customers prior to providing any goods and services. These terms
and conditions are essential to protecting you against liability
claims in the case of an incident or accident occurring.
In this case, the supplier was liable for damages up to $200,000
to their customer who they had been working with for over 10 years.
Are you at risk?
The facts of this case are fairly straight forward. In
La Rosa, the supplier operated a transport business and
provided cartage to the customer over a period of 10 years;
the transport contracts were oral except for the tax invoice
issued by La Rosa, that were sent to the customer after the
completion of the relevant cartage;
the terms and conditions contained an exclusion clause that
'All goods are handled, lifted or carried at owner's
risk. The Contractor shall not be liable for any loss or damage of
property and/or goods of the Client whether such damage was caused
by act, default or negligence on the part of the Contractor, and/or
during a cartage for the customer in August 2011, the
customer's drill rig fell from La Rosa's trailer and
sustained damage and the customer made a claim for damages.
At first instance and on appeal, the Court found that La Rosa
had failed to exercise reasonable care and skill when transporting
the drill rig because this was the only likely explanation for the
rig falling off the trailer and La Rosa was liable for the damage
incurred to the drill rig.
On appeal, La Rosa argued that the exclusion clause printed on
the back of the tax invoice removed all liability from La Rosa
during transport and that Nudrill Pty Ltd had accepted this clause
in all prior dealings. With respect to this, the Court held
despite the parties history of dealing, there was no evidence
that demonstrates that Nudrill knew of, and accepted the exclusion
clause during or before the time the contract for the transport of
the drill rig was entered into;
because La Rosa sent the invoice to Nudrill after the transport
of the drill rig, there was no acceptance (or ought to have been
acceptance) of the exclusion clause. This was because by the time
the invoice was sent the contract had already been completed;
tax invoices are not considered to be a contractual document,
and rather to secure payment for services;
La Rosa had failed to demonstrate that the exclusion clause had
come to be accepted and treated as contractual by the conduct of
What this means for you
This decision illustrates that the issue of terms on the back of
tax invoices is not sufficient notice of the terms and conditions
and is not acceptance that a party would do business with you in
the future on those terms. Hence, a supplier is exposed to their
terms printed on the tax invoices not forming part of the
contractual relationship with a customer.
This decision also reinforces that a supplier of goods and
have a process by which they notify customers of their terms
and conditions of trade that apply to a particular arrangement.
This could be met by providing such notice and terms in quotations
and ensuring that customers accept such terms;
continuously review arrangements with customers to protect
terms of engagement;
ensure that the contract is clear about which terms and
conditions apply to a particular arrangement, whether it be the
customer's or the suppliers terms and conditions of trade.
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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