Rohlig (UK) Limited v Rock Unique Limited [2011] EWHA Civ 18
Rock runs a garden centre. It appointed Rohlig as its freight forwarder to arrange the carriage of sandstone from India. The parties traded happily for a number of years, but then fell out with Rock alleging that it had been overcharged by Rohlig. Rohlig relied on the standard trading conditions of the British International Freight Association which were incorporated into the contract. These provided that sums should be paid when due without set-off and that Rohlig would be discharged from liability unless claims are brought within nine months from the date of the event or occurrence which gave rights to the course of action. Rock argued, amongst other things, that the exclusions did not satisfy the test of reasonableness under UCTA.
The Court of Appeal found for Rohlig and made some observations:-
- To the extent that invoices could not be properly contested, the fees were "due" in any sense of the word. The court would not accept the suggestion that if any part of the sum claimed in an invoice is disputed, nothing is "due" and the provision against set-off does not apply. Any sums due must be paid without deduction.
- The High Court Judge had acted correctly in giving credit for those parts of the invoice which were disputed – on the basis that they were not necessarily "due" and thus not subject to the no set off clause.
- He was also correct in refusing to give credit for matters which were the subject of the counterclaim, because the no set-off clause did not permit that. The court made the point that the purpose of a no set-off clause was not to affect the underlying obligations, merely to ensure that sums due for services rendered are paid promptly without deduction, leaving the customer free to seek remedies by separate action.
- In considering UCTA, the relative strength of the parties bargaining positions was relevant. The Judge was correct in holding that whilst Rock was a small business, it was an experienced commercial enterprise and that there were many businesses offering freight forwarding services which Rock could have chosen instead of Rohlig. Also, Rock had done business with Rohlig in the past and should have been aware that Rohlig contracted on BIFA terms. It was plainly open to the Judge to find that the set-off clause or no set-off clause satisfied the requirement of reasonableness.
- Furthermore, where standard terms have been negotiated between representatives of suppliers and customers (as was the case with the BIFA conditions) they are likely to represent a fair balance of competing interests.
- Turning to the time for bringing claims, the court acknowledged that this was a very different type of clause because it extinguished Rock's claim altogether. Rock had argued that the clause did not apply to causes of action which could not reasonably have been discovered before the time bar expired. However, it was framed in very similar terms to the equivalent term in the Hague-Visby Rules which have been held to discharge the party in breach from substantive liability, not merely to operate as a time bar. The clause was deliberately framed in very broad terms and intended to discharge Rohlig from all liability after 9 months.
- On the question of reasonableness of the time limit clause, the court agreed with the High Court Judge. The BIFA particular clause had been found to be reasonable in another case, Granville Oil v Davis Turner. Whilst the question must be considered separately in each case, where a standard condition of this kind was involved, the court should not draw fine distinctions between cases that in broad terms are very similar. It is important for those engaged in commercial activity that they know whether a particular clause will generally be regarded as reasonable. The circumstances in this case did not seem to the court to differ in any material respect from those in Granville Oil.
This decision indicates that industry standard terms are unlikely ever to be found unreasonable, especially if they have been settled by representatives on both sides. Set off clauses should be drafted so as to apply to the sum invoiced, not the sum due. Note also the decisions on other matters that often occur in practice.
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