ARTICLE
12 April 2024

The finest print – Gispac Pty Ltd v Michael Hill Jeweller (Australia) Pty Ltd, and the risk of ticking boxes

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Carroll & O'Dea

Contributor

Established over 120 years ago, Carroll & O’Dea Lawyers offers expert advice and strong advocacy for clients. With a commitment to high-level service and legal expertise in all areas, they blend tradition with modern skills.
The importance for organisations to closely review all contracts, even those with longstanding vendors.
Australia Corporate/Commercial Law
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The recent decision of Gispac Pty Ltd v Michael Hill Jeweller (Australia) Pty Ltd [2024] NSWSC 18 in favour of a supplier has highlighted the importance of closely reviewing any contracts that an organisation agrees to, even those with longstanding vendors. In particular, any ancillary terms to a contract should not be dismissed, even if they are not readily available. This article looks closely at a particular aspect of the case, and explains how this may be a concern for businesses.

The plaintiff in this matter (Gispac) had, since 2003, supplied paper bags and packing material to jewellery stores operated by the defendant (Michael Hill). This was pursuant to various sales agreements between both parties and the items were ordered by individual Michael Hill outlets through an online portal operated by Gispac. The issue in this arrangement related to particular terms found within a 2012 version of Gispac's sales agreement being:

  • A requirement for Michael Hill to purchase a minimum amount of stock each year;
  • An exclusivity agreement in favour of Gispac; and
  • An automatic renewal of the Sales Agreements every 2 years.

Gispac stated that Michael Hill had breached the above terms (2012 Terms) and as a result they had suffered a loss. Michael Hill argued that the 2012 Terms were not incorporated into later agreements. The later agreements did, however, include the following wording alongside a checkbox: "Please tick to confirm that you agree to agree to the terms and conditions that can be found at the following link" followed by a URL that purportedly led to an online copy of the 2012 Terms. The checkbox had been ticked by Michael Hill's group distribution manager.

The manager stated in cross-examination that when he ticked the box he was not pressured by Gispac to do so quickly and that he chose not to read the terms or take any steps to determine what the 2012 Terms contained. However, Michael Hill contended that the website that hosted the 2012 was not operable during the relevant period that the contract was agreed. It was agreed by both parties that the website was not functioning as at July 2019 when Michael Hill filed its defence, but Gispac did not agree that the website was not functioning at the earlier date. The judge in this instance did not agree with Gispac that the evidence indicated the URL was working at the time the contract was entered into.

This finding did not, however, prevent the 2012 Terms being incorporated into the agreement. Gleeson J found that the wording that preceded the checkbox was sufficient to draw the user's attention to the additional terms relating to the contract. It was not necessary that Gispac take further steps to bring the 2012 Terms to the attention of Michael Hill. It was incumbent upon the signatory to make their own enquiries as to the content of the agreement.

Michael Hill also argued that the 2012 Terms should not be enforceable for other reasons including the application of the Australian Consumer Law or that they amounted to a penalty, but these defences were unsuccessful. As a result, Michael Hill was ordered to pay damages in excess of $2 million plus interest.

While it is likely that Michael Hill will appeal this decision, regardless of the ultimate outcome it provides an important reminder to all of blindly accepting agreements without a proper review, particularly for larger organisations and businesses which cannot rely on consumer protections. A good legal review of an agreement will not only consider the content of the contract itself but also any material that might be included. Where that material is not readily available, enquiries should be made to obtain it (or otherwise any reference to that material should be removed).

Carroll & O'Dea Lawyers have a long history assisting business and organisations consider agreements and contracts of all sizes and are happy to provide a professional review before your organisation ticks a very expensive box.

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.

ARTICLE
12 April 2024

The finest print – Gispac Pty Ltd v Michael Hill Jeweller (Australia) Pty Ltd, and the risk of ticking boxes

Australia Corporate/Commercial Law

Contributor

Established over 120 years ago, Carroll & O’Dea Lawyers offers expert advice and strong advocacy for clients. With a commitment to high-level service and legal expertise in all areas, they blend tradition with modern skills.
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