Scottish Court of Session Decisions

Oakbank Oil Company, Limited, pursuers, brought an action against Love & Stewart, defenders, concluding for £1800 damages for breach of contract.

The facts, as given in the opinion of Lord Johnston, were—“The Oakbank Oil Company are large importers, inter alia, of pit props. From 1888 to 1914, a period of twenty-six years, with the single exception of one year, they had adopted a system of invitation for tenders for the various stores required by them, including pit props, which was the uniform basis of their subsequent contracts. This system was as follows—Their financial year closes

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with 30th June, and in that month in each year, with a view to next year's requirements, they have been in use during this long period to send out to selected contractors—half-a-dozen I think in number—in the matter of pit props, three documents. First, a schedule of conditions on which the contract must proceed. In this schedule of conditions head IX bears ‘the company's specifications, conditions, and form of tender must be strictly adhered to, and not altered in any way whatever. Parties not approving of the same should simply therefore decline to tender. Each specification to be signed before it is lodged.’ Second, a form of tender in the following terms—………‘do hereby offer to supply Oakbank Oil Company, Limited, during the year ending 30th June ……… with the articles specified in Class ……… at the prices quoted in aforesaid specification, and should this tender be accepted hereby undertake faithfully to execute the contract, and to adhere to the foregoing stipulated conditions.’ The form of tender bore in a postscript that tenders endorsed ‘Tender for stores’ were to be addressed to the managing director of pursuers' company, and to be lodged with him not later than 15th June.……… And third, a specification applicable to the particular class of stores required, headed in the case of timber ‘Class No. 12—Timber,’ containing a list of the kinds, as, e.g., ‘pit props 3 in. by 6 ft.’ with the quantity required, and with a column blank in the price for the intending offerer to fill in. The first and second of these documents, i.e., the schedule of conditions and the draft contract, were different pages of the same sheet. The third was a separate paper.

These forms had been sent yearly to the defenders' firm and had resulted in a long series of contracts. There was, however, an interlude of a year which should be mentioned. In the year 1912 the pursuers' company being of the opinion that the contractors' prices had been too high did not send out tenders to contractors for pit props but during that year imported their own timber. However on the invitation of the defenders' firm they reverted to their former practice, and in April 1913 again made a contract with the defenders, on which occasion, in order to get back into the rhythm, they made a contract for fourteen months instead of for a year, and in that one instance they appear to have issued no schedule, specification, or form of tender. In accordance with their former practice on 4th June 1914 the pursuers sent to the defenders, without any covering letter, copies of the three documents which I have described above. Receipt of these documents was acknowledged on 5th June by the defenders, who stated that they were giving the same their careful attention, and hoped in due course to put their best quotation before the pursuers, and trusted to be favoured with a good share of their valued order. This was followed on 15th June 1914 by a letter enclosing the defenders' offer for ‘Class No. 12—Timber,’ in the form required, viz., the form of offer filled in and signed with the schedule of conditions annexed, and the relative specification of quantities with their prices filled in, and also signed. In their covering letter they said—‘We trust the prices quoted will enable you to place your order with us. We thank you for the pleasant business we have had with your firm for so many years past, and assuring you of our best attention, we are, &c. (Signed) for Love & Stewart, Limited, Robert Murray, director.’

But the defenders in their copy of the specification of quantities per incuriam omitted to fill in prices for several of the classes of pit props, and the pursuers' managing director, who had in the end of June and the beginning of July been absent from business, on his return telephoned to the defenders drawing their attention to the omission. This resulted on 8th July in the defenders writing apologising for the omission and sending a list to be substituted, which was a copy of the specification so far as it related to pit props, with this time the whole items priced. The pursuers then intimated to the defenders that their tender was too high and gave them an opportunity of reconsidering their prices. This they did, and on 21st, and again on 29th July, submitted amended lists of prices, undertaking to supply all the pursuers' requirements in pit props ‘in accordance with your schedule class No. 12.’ By schedule, though it is not perfectly clear, I give the defenders the benefit of assuming that they meant specification. On the last date, 29th July, the pursuers wrote accepting the offer, and on 30th the defenders replied acknowledging the acceptance. While no exception had been taken to the schedule of conditions, and particularly head IX thereof, which formed the basis of the pursuers' contracts, the defenders' letter-paper contained at the top, above the address and date, and in no way connected with the writing which followed, these words printed in two closely-set lines in small type in red ink, ‘All offers over a period are subject to stoppages through strikes, lock-outs, &c., and the right to cancel is reserved in the event of any of the countries from which our supplies are drawn becoming engaged in war.’ It appears that they had adopted this form of notice about a year before, when there was apprehension of differences between Russia and Finland interrupting the course of the defenders' supplies, but it so happened that within a week of the contract in question being concluded the present European war broke out, and founding upon the red ink notice on their letter-paper the defenders after having made partial deliveries, cancelled the contract. The pursuers proceeded to buy in against them and are now suing for the difference in price.”

The pursuers pleaded—“2. The pursuers having suffered loss and damage to the extent of the sum sued for in consequence of the defenders' breach of contract, decree should be granted in terms of the conclusions of the summons.”

The defenders pleaded—“1. The defenders having cancelled their contract with pursuers in so far as unexecuted in virtue of a clause in the contract entitling them to do

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so, they are not in any way in breach of contract, and are not liable in damages.”

On 15th August 1916 the Lord Ordinary ( Dewar), after a proof, decerned against the defenders for the sum of £1633.

Opinion.—[ After narrating the facts of the case]—“Parties have agreed on the amount which falls to be paid in the event of the defenders being found liable, and the only question which I have to determine is whether the note in red ink forms a condition of the contract. That is a question which largely depends upon the facts proved in evidence.

After careful consideration of the whole circumstances I have reached the conclusion that the pursuers have established their case.

It may be true, as the defenders say, that it is quite a common practice for tradesmen to intimate on their writing paper the terms and conditions on which they are prepared to do business. But it does not necessarily follow that the person with whom business is transacted will be bound by such conditions. That will depend upon circumstances. If he knew or ought to have known of the conditions, of course they will bind him. But it he has not in fact read them the tradesman must then show that he has done all that is reasonably possibly to bring them under his notice.

So far as I am aware there is no authority directly in point. But the Court has frequently considered, both in Scotland and England, the question whether conditions printed on tickets issued to passengers on railways and steamboats are sufficient to limit the common law liability of carriers. The decisions are by no means uniform, but I think the later and more authoritative are to the effect that it is not always sufficient to print conditions on the ticket. It is possible that they may escape the passengers' notice; and it has therefore been held that if he has not read them and did not know of them they will not bind him unless the company can show that it did all that was reasonably sufficient to bring them to his notice— Parker, 2 C.P.D. 416; Rowntree, [1894] AC 217; Williamson, 53 S.L.R. 433.

I see no reason why the same principles should not apply to a case of this kind.

The pursuers, as I have said, had not read the note in red ink, and did not know that it had any relation to the contract; and the only question therefore is whether the defenders did all that was reasonably sufficient to bring it to their notice. I do not think they did.

In considering what is reasonably sufficient the whole circumstances must be taken into account. It is, for example, obviously more difficult to direct attention to conditions on a railway ticket than in a letter. When one is adjusting the terms of contract by letter it is usual to state the conditions in that part of the letter which everyone reads—or must be presumed to have read, as Mr Macmillan put it—between the words ‘Dears Sirs’ and ‘Yours truly.’ That is the safe and simple course, and avoids all possibility of error. Mr Climie is asked why he did not do this, or at least direct attention to the note, and he replied that he thought the course he followed kept the defenders safe, and he did not consider anything else at all. I think that was a mistake. He should have considered the pursuers' position also. He should have remembered that it was possible that they might not read the note, thinking that it had no relation to the contract, that they might assume that all the conditions were contained in that part of the letter which was specially addressed to them, where all that is material is usually to be found. It would have been fair to the pursuers, and not less safe for the defenders, if he had stated in the letter, ‘Please note the condition printed in red ink,’ or used some such expression to direct attention to it.

And there was special reason for care in this matter, because the defenders knew that the pursuers did not expect this or any other new condition imported into the contract. They had intimated that they would not consider tenders subject to any conditions other than those which they set forth in the schedule. Mr Climie stated in his evidence that in his view the schedule did not form part of the contract, but I think it did. That, indeed, is expressly admitted by the defenders in answers 2 and 3 of the record. But even if it did not the defenders had dealt with the pursuers for many years, and were familiar with the terms and conditions on which they purchased props, and if they intended to alter these conditions they should have done so in a much more direct manner. If they desired to import a general condition into this particular contract they ought in my opinion to have made reference to that condition.

I do not think that failure to read the note in red ink was due to carelessness on the part of the pursuers. Mr Miller, who had charge of the contract, appeared to be a very competent business man, and his clerk Mr Thomson was an intelligent witness. Yet neither of them read it, and I am not surprised. They had a large correspondence to attend to, and would not naturally expect to find a condition of the contract placed where this note was placed. It was on that part of the paper where names and addresses, telephone numbers, trade advertisements, and the like are to be found. It was in red ink, but tradesmen sometimes print a change of address, or the fact that they have received prize medals, or a royal warrant, in red ink. The red ink did not suggest that it had any relation to this contract. And the type is smaller and occupies much less space than the other printed matter at the top of the paper. It would, I think, be unfortunate if it were to be held that business men must be assumed to have read all the printed matter which a tradesman may print upon his writing paper. It would impose a considerable burden without any corresponding advantage.

A matter of this kind probably strikes different minds in different ways, but I confess that, like Mr Miller and Mr Thomson, it would not have occurred to me to read any of the printed matter in this letter. I

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should have assumed that all that was material was contained in the written part. Other more careful people might take a different view. But, as was said in one of the cases to which I have referred, the defenders must ‘take mankind as they find them,’ and do ‘what is sufficient to inform people in general.’ I think they have failed to do that. And I accordingly find them liable, and grant decree for £1633, the sum which the parties have mutually agreed upon, with expenses.”

The defenders reclaimed, and argued—When there was a signed mercantile contract, the contracting parties were bound by every term of it, and were held to be aware of all its terms unless one party had been misled by the other, and it was then for him to prove he had been misled— Roe v. Naylor, [1917] 1 K.B. 712. The ticket cases relied upon by the Lord Ordinary and the similar cases of Grand Trunk Railway of Canada v. Robinson, [1915] AC 740; Hood v. The Anchor Line, 1916 S.C. 547, 53 S.L.R. 429, were not in point— Henderson v. Stevenson, 1875, 2 R. (H. L.) 71, per Lord Chelmsford at 76 and Lord Hatherley at 77; Watkins v. Rymill, 1883, 10 QBD 178, per Stephen, J., at 184. The ticket was primarily a voucher handed over in circumstances in which there was no time to consider any conditions referred to; it was not signed nor were its terms assented to; the people to whom it was issued were the general public, who were not to be held to apply the ordinary business man's intelligence in the matter; and, in the ticket cases reported, the companies were by the conditions attempting to limit their common law obligations. In the present case the ordinary rules applying to contracts entered into by correspondence must be applied. The whole of the documents must be considered and all parts of them must be held to be included in the contract. Here the common case of documents partly printed and partly written arose. In such cases it could not be said that the printed matter was to be ignored. The case of a sale note was similar. The red ink clause was part of the printed elements in the contract; there was no question of concealment of that clause, nor could a reasonably careful man be misled with regard to it. In Love & Stewart, Limited v. Instone & Company, Limited (House of Lords, 18th May 1917), a similar headnote had been treated as part of the letter. The defenders should be assoilzied.

Argued for the pursuers (respondents)—The Lord Ordinary was right. The contract must be arrived at by a consideration of the whole correspondence, not by excerpting one or two letters from it and considering them without reference to what surrounded them— Hussy v. Horn-Payne, 1879, 4 A.C. 311. All the documents from 15th June onwards must be looked to. The letter of 29th July could not be taken in isolation, for it referred to the pursuers' schedule, and that was a reference to the schedule attached to the printed schedule of conditions, which the defenders filled up and returned to the pursuers with the covering letter of 15th June. At that date the covering letter was the only document before the pursuers containing the red ink clause. The offer made by the defenders by filling up the blank page attached to the schedule of conditions and signed by them did not contain any such clause, and the defenders must be held to have agreed to accept Condition IX. It was now said that Condition IX had been modified by the red ink clause. In such circumstances it was for the defenders to show that they had taken all reasonable steps to call the pursuer's attention thereto. The red ink clause was quite inappropriate to produce that result, it was likely to be overlooked being placed amongst what was usually advertising matter, and if it was meant to be part of the communication it should have appeared in what was communicated, i.e., the letter itself, which an ordinary business man was entitled to assume was contained between the address and “yours truly,” that was all that was authenticated by the signature. Further, the red ink clause did not interpret the actual writing but contradicted it. But even if the letter of 29th July were to be taken alone, the modification introduced by the red ink clause was very important, for it left the pursuers exposed to the changes of the market for the period of the contract, the very thing they desired to avoid as the defenders knew, and so material a term of the contract could not be fairly introduced in such a manner. The ticket cases were not strictly analogous for there was nothing to distinguish one or more of the conditions from the others; here there was the printed clause and the actual letter. The sale note was not analogous, for the parties were bound to read every line of it— Roe's case ( cit.). In Love & Stewart's case ( cit.) the question was whether there was a completed contract or not.

At advising—