Scottish Sheriff Court Decisions

A473/12

 

IN THE SHERIFFDOM OF LOTHIAN AND BORDERS AT EDINBURGH

 

 

 

JUDGMENT

 

by

 

SHERIFF NMP MORRISON, QC

 

in the cause

 

GRAFTON MERCHANTING GB LTD t/a BUILDBASE

Pursuer

 

against

 

SUNDIAL PROPERTIES (GILMERTON) LIMITED

 

Defender

__________________

 

 

Act: MacColl, Advocate, instructed by BBM, Solicitors, Wick

Alt: McGregor, Simpson & Marwick, Solicitors, Edinburgh

 

 

EDINBURGH, 30 January 2013

 

The sheriff, having resumed consideration of the cause, allows to parties, before answer, a proof of their respective averments on a date to be afterwards fixed; reserves the question of the expenses of this debate meantime as agreed between parties.

 

 

 

 

NOTE

 

 

The contractual circumstances

 

[1] The defender applied to the pursuer for a trade credit account. The application form, which the defender completed and returned, contained the pursuer's terms and conditions. It is produced and adopted as part of the pursuer's pleadings in article 2 of condescendence. Condition 5(a) provided that payment for goods supplied on a credit account, unless otherwise agreed in writing by the pursuer, was due and payable not later than the last day of the month following the month of delivery. In an attempt to pre-empt a purchaser trying to rely on the purchaser's terms and conditions in a subsequent purchase order, condition 1 of the pursuer's conditions provided:

 

"All orders are accepted by the Company solely on these Terms and Conditions, which override any terms and conditions stipulated, incorporated or referred to by the Customer whether in its order or any negotiations. No variation or addition to these Terms and Conditions shall be incorporated into the Contract unless such variation or additions and the Company's agreement thereto are both expressly agreed in writing."

 

[2] The defender sent in a purchase order on 14 April 2009 for cedar deckboard in response to a quotation from the pursuer on the same date. The purchase order referred to the order being subject to the defender's terms and conditions (averred to be printed on the back). Condition 15 of those conditions is averred by the defender in answer 2 as providing that the defender had the right to require the goods to be delivered according to schedules submitted by them; and the defender had the right to defer or suspend deliveries. The defender's terms and conditions were not produced and not adopted as part of its pleadings. Rather strangely, Mr McGregor submitted that it was for the pursuer to do that.

 

[3] It was averred by the pursuer and admitted by the defender that, following the purchase order, the defender sought that the pursuer, and the pursuer agreed to, store the goods ordered by the defender; and, it was averred by the pursuer, the pursuer allowed the defender to pay for the goods as it required them. Thereafter the defender took delivery of, and paid for, some of the goods. Some two and a half years later, in September 2011, the pursuer wanted payment for the remainder of the goods and rendered an invoice. The defender did not pay because it had not requested delivery. The pursuer sued for payment on the ground that, under its conditions, the defender was bound to take delivery and pay for the goods. The defender pleaded that, by virtue of its condition 15 which the pursuer had accepted, the defender had not requested delivery; and it did not have to pay until delivery.

 

[4] There are three further points to note.

(1) There was a dispute about whether the pursuer received only a fax of the front page of the purchase order without the defender's conditions (which the pursuer avers and the defender denies) and whether an employee of the pursuer subsequently went to get them from the defender's office on 14 April 2009 (which the defender avers and the pursuer denies).

(2) In answer 2 of its pleadings, the defender admits that the pursuer's conditions applied, but goes on to aver that the defender's conditions also applied (not that its conditions applied instead of those of the pursuer). The averments of the defender which the pursuer sought to exclude from probation were, however, to the effect that the defender's conditions applied.

(3) The application by the defender for a trade credit account was made in June 2006; but there were no averments in the pleadings of a course of dealing.

 

 

The issues

 

[5] The principal issue at debate was whether only the pursuer's conditions applied to the contract. This was a" battle of the forms" issue with the unusual twist that the defender avers that both parties' conditions apply. The important point is whether it is possible for a seller (or offeror), by a condition such as the pursuer's condition 1, to prevent a purchaser (or offeree) from relying on his terms and conditions by rendering a purchase order with different conditions.

 

[6] There was an additional submission about the defender's averment that payment was not due until delivery.

 

[7] For the pursuer, Mr MacColl did not seek decree de plano in terms of the pursuer's third plea, but sought to exclude from probation certain averments of the defender. He accepted that there would require to be a proof of quantum.

 

 

The battle of the forms argument

 

[8] For the pursuer, the argument was simple. The defender's conditions could not apply because that could occur only if, by virtue of condition 1 of the pursuer's conditions, the parties agreed in writing. That had not occurred; the defender's condition 15 did not apply and the pursuer's conditions did. Accordingly, the defender's averments about the application of its terms and conditions should not be remitted to probation. These averments were in answer 2 from "Said goods" in line 16, to "with the pursuers." in line 31, on page 6 of the record in number 18 of process. The pursuer's case was not predicated on whether it had received the defender's terms and conditions but on whether the defender's conditions had effect at all under the "last shot" principle even if they had been communicated to the pursuer, and a proof of that issue was not necessary.

 

[9] I was referred to Specialist Insulation Ltd v Pro-duct (Fife) Ltd, [2012] CSOH 79, a case in which, unusually, each party argued that the other party's conditions applied. In that case, the pursuer's conditions, in its quotation, stated that offers were accepted subject to its conditions (including arbitration) unless otherwise agreed in writing; there was no such agreement. The defender then issued a purchase order along with separate conditions (including adjudication) not referred to in the purchase order, which required to be signed by both parties but which were not signed by the pursuer. The pursuer supplied the goods. It was argued for the pursuer that the defender's conditions applied. Lord Malcolm held that the pursuer's conditions applied; in other words the pursuer's argument, that the last shot principle applied, was unsuccessful. That case, it was submitted, supported the pursuer's argument in this case.

 

[10] For the defender, it was submitted by Mr McGregor that there should be a proof before answer because there was a dispute about whether the defender's conditions were brought to the attention of the pursuer; the parties' actions (in relation to the agreement to store the goods and whether the pursuer's accepted the defender's conditions) might be relevant to which conditions formed the contract. A proof would be of assistance in determining what the conditions were by finding out how the contract operated.

 

[11] It was then argued by Mr McGregor that, following the traditional rules of contract law, the pursuer's offer to sell was met by a purchase order which was a counter-offer from the defender to buy on its terms and conditions. When the pursuer supplied goods to the defender, it was accepting the defender's conditions. This is the "last shot" argument: whoever gets in last, wins. The pursuer's condition 1 was not relevant because the defender's purchase order was a counter-offer which the pursuer accepted by supplying the goods. The pursuer had accepted the defender's conditions by delivering the goods ordered. (I pause to note that it is not clear from the pleadings that goods were delivered because the pursuer avers that the goods were stored by the pursuer for the defender, which the defender admits. It might be that the pursuer could be said to have accepted the defender's conditions by storing the goods or by stating, as averred, that on or about 16 April 2009 the pursuer was in a position to deliver the goods and sought to make arrangements to deliver them.)

 

[12] Mr McGregor went on to say that the arrangement to store the goods was a deferral of delivery because of the defender's conditions and therefore evidence that the pursuer accepted the defender's conditions. It does not seem to me, as Mr McColl submitted, that this point is clearly pled by the defender.

 

[13] Mr McGregor referred me to McBryde on The Law of Contract in Scotland, third edition, at paragraphs 6-97 to 6-109 and in particular to paragraph 6-102 where the traditional approach is confirmed as the law, and to the case cited in paragraph 6-104 (Uniroyal Ltd v Miller & Co Ltd, 1985 SLT 101). I was also referred to Tekdata Interconnections Ltd v Amphenol Ltd, [2009] EWCA Civ 1209, where Longmore, LJ, reiterated that the law in England is still the traditional approach and that it is difficult to displace the traditional analysis unless there is a clear course of dealing between the parties (para. 21). I note that there was no condition in that case seeking to prevent the other party's conditions applying. Mr McGregor distinguished the Specialist Insulation case because the defender in that case did not refer to its conditions and both parties had to sign them and the pursuer had not.

 

[14] Mr McGregor went on to argue that parties could agree and vary a contract as they liked with consent notwithstanding a condition to do so only in writing. Variation, however, is not mentioned in the pleadings.

 

[15] It is clear, in my opinion, that, as a matter of pure textbook contract law of offer and acceptance, where an offer on one set of terms and conditions is met by a (purported) acceptance with another set of terms and conditions, the latter is a counter-offer. If the offeror then acts on the purported acceptance, he does so on the offeree's terms and conditions. I did wonder if this was a case in which the pursuer had achieved the object of excluding the purchaser's conditions from applying. I think that the pursuer is wrong in contending that its condition 1 applies before the contract is completed and that acceptance means acceptance only on its terms. Condition 1 will only apply if or once the pursuer's conditions have been accepted; only then is there a contract. I do not think that it is possible for the pursuer to prohibit the defender, by the means of condition 1, from making a counter-offer in its purchase order. The position could be different if, which is what most consumers face, the acceptance can only be made, for example, on a document provided by the offeror. Condition 1 does not have that effect. The issue is discussed in McBryde on The Law of Contract in Scotland at paragraphs 6-97 to 6-109, and at paragraph 6-102 the traditional approach is confirmed as our current law; and that seems to me to be the case. I do not think that the pursuer has achieved its object with condition 1.

[16] In my opinion, in Specialist Insulation Ltd, Lord Malcolm held, in paragraphs [18] to [21] of his opinion, that the pursuer's conditions applied because the pursuer had not accepted the defender's conditions as it had not signed them, and, given the silence of the defender following the pursuer's failure to sign, the defender must be taken as having accepted the goods on the pursuer's conditions. In paragraph [21] of his opinion, he indicates that a different analysis might have applied if the defender's conditions allowed for acceptance simply by the pursuer supplying the goods. The implication, in other words, is that the pursuer's condition, that its conditions applied unless otherwise agreed in writing, would not have prevented the defender's conditions from applying. Thus, the point at issue in this case before me was not decided in that case. At the very least, that case was not decided on that point alone. I think that Mr McGregor was right to distinguish that case from this case.

 

[17] In this case, looking objectively at what the parties must be taken to have intended, the pursuer's offer to contract on its conditions was met by the defender's counter-offer to contract on its conditions. The pursuer then proceeded to process the order and, as averred by the pursuer, wrote on or about 16 April 2009 stating that it was in a position to deliver the goods. The pursuer would have to be regarded as having accepted the defender's conditions.

 

[18] Accordingly, the pursuer does not succeed in having the averments about the application of the defender's conditions excluded from probation. It is, therefore, necessary to have a proof on whether the defender's conditions were brought to the attention of the pursuer.

 

[19] The defender's position is complicated by the averment in answer 2 that both parties' conditions apply. If that were so, then the pursuer's condition 1 also applies; and the pursuer's conditions cannot subsequently be varied except in writing subject to an exception discussed below at paragraphs [22] to [25]. I do not see how the defender can pick and choose which condition of whose conditions apply. The defender appears to do so in its pleadings by averring that pursuer's condition 5(a) applies as well as the defender's condition 15. What is to happen if there are mutually inconsistent conditions; which condition is to apply? I have not seen the defender's conditions and I do not know if the defender's contention that both sets of conditions apply is tenable in fact and law in the circumstances of this case. The pursuer has not raised this issue. All that was necessary for me in this debate was to decide the issue of whether the pursuer's conditions apply to the exclusion of those of the defender's.

 

[20] A further complication is that there was a subsequent agreement by the pursuer to store the goods and, according to the pursuer, allow the defender to pay for the goods as the defender required them. It is not clear whose conditions the agreement is consistent with. The pursuer's condition for payment is payment one month after delivery (condition 5(a)). I do not know what the defender's condition for payment is, but, in answer 2, the defender relies on the pursuer's condition 5(a). Condition 6(a) of the pursuer's conditions provides for delivery by the customer collecting the goods from the pursuer "at any time" after notification from the pursuer that the goods are ready for collection or, if some other place is agreed, by the pursuer delivering to that place. From the pursuer's averments in article 2 of condescendence, it was originally agreed by the pursuer to deliver them to the defender. Condition 15 of the defender's conditions, it is averred in answer 2, applied and allowed the defender to have the goods delivered according to their schedules and to defer or suspend delivery. There is no specific provision in the pursuer's conditions for the time within which goods must be delivered or collected. At common law it would be within a reasonable time. The defender's purchase order, adopted as part of the pursuer's pleadings, specifies a place for delivery but does not have a date for delivery. In the place for a date it looks as if the words "to be called off" has been written.

 

[21] It is not averred for the pursuer that the goods are to be treated as delivered by the pursuer storing them. The averment in article 2 is that under the agreement the pursuer allowed the defender to pay as the defender required the goods. On one view the agreement could be inconsistent with the pursuer's conditions and consistent with the defender's condition 15. The pursuer avers that the agreement was temporary; but the defender denies it, and also appears to deny that it was allowed to pay for the goods as it required them and relies on condition 15. Proof is required about what the agreement was and what effect the parties intended the agreement to have on the conditions of the contract. If the pursuer's condition 1 applied, the agreement might have to be expressly agreed in writing by the pursuer.

 

[22] This brings me to a point that arose during the debate about varying a written contract through subsequent actions. Mr McGregor wished for an opportunity to cite authority. It was agreed, at the suggestion of Mr MacColl, that this be done by written submissions. These submissions for the defender and the response for the pursuer were duly lodged timeously on 17 and 24 January respectively.

 

[23] I agree with Mr McGregor's general proposition in his written submission for the defender that parties to a written contract may vary that contract by their actings. Where there is a condition in a contract that variation must be in writing, then it must be so unless there is strong evidence of facts and circumstances explicable only on the basis that there was an express or implied variation: Minevco Ltd v Barratt Southern Ltd, 2000 SLT 790, per Lord Justice Clerk Cullen at paragraph [16]. The purpose of a condition such as the pursuer's condition 1, in my view, is to try to avoid a party's conditions being disapplied or varied without its knowledge and consent. That does not mean that, by clear actings, parties to a contract did not do so. In relation to condition 1, that has effect only once there is a contract on the pursuer's conditions.

 

[24] For the defender, it was argued that there was an issue for proof about whether the contract was varied in relation to delivery. For the pursuer, the argument was that parties agreed that variation could only be in writing (pursuer's condition 1). In relation to Anglo-Auto Finance Co v Baillie, 1907 SLT (Sh Ct) 14, relied on by Mr Mcgregor in his written submission, that was a case of personal bar not variation and, in any event, was wrong in law. It seems to me that whether the issue arises as an assertion of a contractual position or as personal bar will depend on how the issue arises; they are not mutually exclusive and may be opposite sides of the same coin. In that case the sheriff did also deal with the case as one of variation of a condition.

 

[25] In my opinion, condition 1 of the pursuer's conditions could be varied by strong evidence of facts and circumstances explicable only on the basis that there was an express or implied variation even though not in writing. Standing that condition, it might be very difficult to establish that parties' actings did have the effect of variation without the written agreement of the pursuer.

 

 

Payment not due until delivery

 

[26] The second issue argued for the pursuer was to exclude from probation the averment in answer 2 in line 31 on page 6 of the record that "Payment in respect of such goods does not become due until the goods are delivered."

 

[27] This averment only arose, it was submitted, if the defender's conditions applied. Under pursuer's condition 5(a), payment was due at the end of the month after delivery. The defender, however, could not avoid payment by refusing delivery: if the defender impeded delivery then the goods were deemed to have been delivered. I was referred to Mackay v Dick & Stevenson, (1881) 8 R (HL) 37, 45 where Lord Watson refers to the law as being as is stated in Bell's Principles that "If the debtor bound under a certain condition have impeded or prevented the event, it is held as accomplished." In that case the appellant thwarted the respondent from fulfilling a condition of a particular test of the respondent's machine delivered to the appellant. The respondent was held to be entitled to payment. In the case before me it was submitted, the defender was bound to accept delivery. There was not an express written obligation for delivery, but there was a contract to purchase and pay for goods when delivered. The corollary was that the defender must accept delivery.

 

[28] Mr McGregor argued that to be paid the pursuer had to deliver the goods; and the pursuer had not delivered them. In Mackay, the goods had been delivered. The remedy for the pursuer was to seek damages for alleged breach of contract.

 

[29] I have decided that the pursuer's conditions do not apply to the exclusion of the defender's; although I note that the defender relies in part on the pursuer's condition 5(a). In any event, the pursuer avers in article 2 that, in the subsequent agreement, it allowed the defender to pay for the goods as the defender required them. I do not see how the pursuer can now argue something different. I appreciate that the pursuer avers that the agreement was temporary; but the defender denies this. I think that there has to be proof about the agreement, and what the applicable conditions were, before this issue can be determined.

 

 

Proof before answer and expenses

 

[30] Accordingly, I appoint the cause to a proof before answer. As parties were agreed, it was appropriate to reserve the question of the expenses of this debate.