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It was a bleak winter for our law of contractFaced with this abuse of power - by the strong
against the weak - by the use of the small print of the conditions - the judges did what they
could to put a curb upon it. They still had before them the idol, freedom of contract. They
still knelt down and worshipped it but they concealed under their cloaks a secret weapon.1
There has been much debate on whether, and to what extent, courts should enforce standard
form contracts. On one hand there are the traditional concerns of promoting freedom
and certainty of contract.2 On the other hand there is the concern to curb the potential for
unconscionable agreements concluded between parties of unequal barging power.3 While
vitiating factors such as misrepresentation, mistake, and duress operate to control procedural
unfairness the nature of standard form contracts and the circumstances within which they are
agreed combine to produce a substitutive unfairness, which often falls outside the parameters
of actions relying on such vitiating factors.4 This weakness, the result of the common laws
historical preoccupation with libertarian ideals,5 has been increasingly exposed by the
proliferation of standard form contracts in consumer transactions over the past one hundred
years.6 In response common law developed two key mechanisms through which to police the
use of standard form contracts: incorporation and interpretation.7 More recently, parliament
has sought to bolster the courts ability to redress substantive unfairness particularly in
1. George Mitchell (Chesterhall) Ltd v Finney Lock Seeds Ltd [1983] Q.B. 284, per Lord Denning at 297.
2. Concerns which grew from the philosophical and economic milieu of the late eighteenth century and to which the
judiciary were predisposed. Samuel Williston, Freedom of Contract, Cornell Law Quarterly 6 (1921): 365 at 366-369;
James Gordley, The Philosophical Origins of Modern Contract Doctrine (Oxford: Clarendon Press, 1991) esp. 214-229.
John Griffith, The Politics of the Judiciary (Manchester: Manchester University Press, 1977). For a critque of the traditional
narrative see; David Lieberman, Contract before Freedom of Contract, in The State and Freedom of Contract, 89-121
(Stanford: Stanford University Press, 1998).
3. In George Mitchell (Chesterhall) Ltd v Finney Lock Seeds Ltd, Lord Denning MR gave a characteristically colorful
summary of the debate and outlined the development of common law and statutory remedies by comparing freedom of
contract with oppression of the weak in the context of exclusion clauses. 296-301. See the epigraph.
4. See below and Mindy Chen-Wishart, Contract Law, Fourth Edition (Oxford: Oxford University Press, 2012) 370.
5. See above note 2 and P.S. Atiyah, The Rise and Fall of Freedom of Contract (Oxford: Clarendon Press, 1985).
6. Martin Cutts and Chrissie Maher, Small Print: the Language and Layout of Consumer Contracts: A Report to the National
Consumer Council (London: National Consumer Council, 1983). This trend is not restricted to England and Wales. More
recently, the National Consumer Law Center has estimated that over 80% of contracts with internet service providers
in Massachusetts are standard form. National Consumer Law Center, Establishing Billing and Termination Practices
for Telecommunications Carriers, (Boston: Commonwealth of Massachusetts Department of Telecommunications and
Enegry, 2006) 3.
7. The principles of interpretation have almost exclusively been developed in case law relating to exclusion and liability
clauses: Glynn v Margetson & Co. [1893] A.C. 351; London and North Western Railway Co. v Neilson [1922] 2 A.C. 263;
Cunard Steamship Co. Ltd. v Buerger [1927] A.C. 1; Canada Steamship Lines Ltd. v The King [1952] A.C. 192; Sze Hai
Tong Bank Ltd. v Rambler Cycle Co. Ltd. [1959] A.C. 576; Levison v Patent Steam Carpet Cleaning Co. Ltd. [1978] Q.B. 69;
Ailsa Craig Fishing Co. Ltd. v Malvern Fishing Co. Ltd. [1983] 1 All E.R. 101; George Mitchell (Chesterhall) Ltd. v Finney
Lock Seeds Ltd. [1983] 2 A.C. 803.
George Mitchell (Chesterhall) Ltd. v Finney Lock Seeds Ltd. [1983] 2 A.C. 803
8. i.e. Unfair Contract Terms Act 1977 [http://www.legislation.gov.uk/ukpga/1977/50] and The Unfair Terms in Consumer
Contracts Regulations 1999 [http://www.legislation.gov.uk/uksi/1999/2083/contents/made].
9. In one sense standard form contracts could be said to exist without consensus ad idem in a broad sense however, on
most occasions the parties intend to enter into a legally binding agreement for exchange of goods or services and are
only without agreement to the [same] thing in respect of the conditions under which the contract they consent is to be
executed. As to the requirement and extent of consensus ad idem see; Household Fire and Carriage Accident Insurance
Co. Ltd. v Grant (1879) 4 Ex D 216; Carlill v Carbolic Smoke Ball Company [1893] 1 QB 256; R. Austen-Baker, Gilmore
and the Strange Case of the Failure of Contract to Die After All Journal of Contract Law 18 (2002): 1. cf. the American
approach in Baltimore & Ohio R. Co. v United States (1923).
10. When a document containing contractual terms is signed, then, in the absence of fraud, or, I will add,
misrepresentation, the party signing it is bound, and it is wholly immaterial whether he has read the document or not.
LEstrange v E. Graucon Ltd. [1934] 2 K.B. 394 per Scrutton LJ at 403; Peekay Intermark Ltd. v Australia and New Zealand
Banking Group Ltd. [2006] 2 Lloyds Rep. 511.
11. Research commissioned for the Crowther Committee in 1971 suggested that over 50% of consumers concluding
hire-purchase agreements did not properly read the documents. Commitee on Consumer Credit, Survey of the Past
and Present Borrowing Patterns of Consumers in Britian (London: Department of Trade and Industry, 1971) 17. A 1980
report by the National Consumer Council revealed that only 26% of consumers entering into a hire purchase or credit
sale agreement had read the entire agreement. National Consumer Council, Consumers and Credit (London: National
Consumer Council, 1980) 216. More recently, the Office of Fair Trading found that just 23% of consumers had a good
read of the contract or its terms and conditions before signing. Gavin Ellison, Quantitative Survey of Consumers Appendix
D to Consumer Contracts Report (London: Office of Fair Trading, 2011) 31.
12. Ibid.
13. Merchants of digital content and computer software uniformaly adopt the take it or leave it approcah leaving no
room for negeoation, however these catagories of contract were the less likely to result in consumer dissatiffaction or
complaints. Office of Fair Trading, Consumer Contracts, (London: Office of Fair Trading, 2011).
14. Granville Oil and Chemicals Ltd. v Davies Turner and Co. Ltd. [2003] 1 All E.R. 819; Watford Electronics Ltd. v
Sanderson CFL Ltd. [2001] IP & T 588
15. The use of standard form contracts by small businesses is officially encouraged in Australia for these reasons:
Department of Industry, Innovation, Science, Research, and Tertiary Education, Working with Contracts, (Canberra:
Commonwealth Government, 2012) at 23-24. cf. the Law Commissions recommendations that contractual relations
between small and medium enterpriese should be govenrned by similar principles used in the policing of consumer
contracts: The Law Commission and The Scottish Law Commission, Unfair Terms in Contracts (London: Her Majestys
Stationery Office, 2005) at 4, 14 and esp. 15-17 [Law Com. No. 292, Scot. Law Com. No. 199].
16. Butler Machine Tool Co Ltd v Ex-Cell-O Corporation (England) Ltd. [1979] WLR 401.
17. The power to override exemption clauses found to be unreasonable had previously been introduced in the case of
implied terms in the sale of goods by the Supply of Goods (Implied Terms) Act 1973. Similar powers now exist in section
55 of the Sale of Goods Act 1979. The UCTA however, provides more extensive controls to a broader category of contracts
and is therefore discussed here more fully.
18. But section 13(1) includes clauses making enforcement of liability subject to compliance with a condition, clauses
excluding or limiting any right or remedy that would otherwise be available, and clauses restricting or excluding rules of
evidence or procedure. See: Stewart Gill Ltd. v Horatio Myer & Co. Ltd.[1992] 1 Q.B. 600. Terms which purport to modify
expected obligations are also covered by section 13: Smith v Eric S. Bush [1990] 1 A.C. 831.
19. Under section 7 of the Electronic Communications Act 2000 electronic signatures are valid instruments of incorporation.
20. Terms may also be incorporated by the importance attached test: City and Westminster Properties (1934) Ltd. v Mudd
[1959] Ch. 129 and may be found enforceable although not incorporated by the implication of a collateral contract:
Evans & Son (Portsmouth) Ltd. v Andrea Merzario Ltd. [1976] 2 All E.R. 930.
21. Parker v South Eastern Railway [1877] 2 C.P.D. 416; Chapelton v Barry Urban District Council [1940] 1 K.B. 532;
Olley v Marlborough Court Hotel [1949] 1 K.B. 532; Thornton v Shoe Lane Parking Ltd. [1971] 2 QB 163; Grogan v Robin
Meredith Plant Hire
[1996] C.L.C. 127; Photolibrary Group Ltd (t/a Garden Picture Library) & Ors v Burda Senator Verlag GmbH & Ors
[2008] 2 All E.R. 881. For a useful general summary of the key decisions see: Claire Strickland, Tickets Please!, (Legal
Executive, February 2003): 20.
22. Parker v South Eastern Railway; Gibaud v Great Eastern Railway Company [1921] 2 K.B. 426; OBrien v Mirror Group
Newspapers Ltd. [2001] E.W.C.A. Civ. 1279.
23. the more unreasonable a clause is, the greater the notice which must be given of it. Some clauses which I have seen
would need to be printed in red ink on the face of the document with a red hand pointing to it before the notice could
be held to be sufficient. J. Spurling Ltd. v Bradshaw [1956] 1 W.L.R. 461 per Denning LJ at 465; Parker v South Eastern
Railway; Interfoto Picture Library Ltd. v Stiletto Visual Programmes Ltd. [1989] Q.B. 433; Ocean Chemical Transport Inc.
v Exnor Craggs Ltd. [2000] 1 All E.R. 519. For insight of the reasonable test in operation see: Kaye v Nu Skin U.K. Ltd.
[2012] C.T.L.C. 69 here a clause providing that disputes were to be resolved by arbitration in Utah was held to not to
be unreasonable or onerous. Elizabeth Macdonald, The Duty to Give Notice of Unusual Contract Terms, Journal of
Business Law, (September 1988): 375.
24. McCutcheon v David MacBrayne Ltd. [1964] 1 Lloyds Rep. 16; Hardwick Game Farm v Suffolk Agricultural and
Poultry Producers Association Ltd. [1969] 2 A.C. 31; Petrotrade Inc. v Texaco Ltd. [2002] 1 W.L.R. 947; Balmoral Group
Ltd. v Borealis Ltd. & Ors. [2006] 2 Lloyds Rep. 629.
25. Hollier v Rambler Motors (AMC) Ltd. [1972] 2 Q.B. 71; Eric Barendt, Exemption Clauses: Incorporation and
Interpretation, The Modern Law Review 35, no. 6 (November 1972): 644.
26. Linda Mulcahy, Contract Law in Perspective (Oxford: Routledge, 2008) 160; WN Hillas & Co. Ltd. v Arcos Ltd. (1932)
147 L.T. 503.
27. British Crane Hire Corporation Ltd. v Ipswich Plant Hire Ltd. [1973] Q.B. 303 cf. Scheps v Fine Art Logistic Ltd
[2007] E.W.H.C. 541 (Q.B.); Richard Austen-Baker, Implied Terms in English Contract Law (Cheltenham: Edward Elgar
Publishing, 2011) at 79-99.
28. Beck and Co. v Szymanowski and Co. [1924] A.C. 43; Houghton v Trafalgar Insurance Co. Ltd. [1954] 1 Q.B. 247.
The contra proferentem rule is now expressly incorporated in relation to consumer contracts in the Unfair Terms in
Consumer Contracts Regulations 1999, SI 1999/2083, reg. 7(2).
29. Andrews Bros. (Bournemouth) Ltd. v Singer & Co. Ltd. [1934] 1 K.B. 17.
30. Canada Steamship Lines v The King [1952] A.C. 192 per Lord Morton at 208; White v John Warwick Co. Ltd. [1953]
1 W.L.R. 1285. cf. the more relaxed approach in recent cases: Investors Compensation Scheme Ltd. v West Bromwhich
Building Society [1998] 1 W.L.R. 898; HIH Casualty & General Insurance Ltd. v Chase Manhattan Bank [2003] 1 All E.R.
349. Although: Monarch Airlines Ltd. v London Luton Airport Ltd. [1997] C.L.C. 698; E.E. Caledonia Ltd. v Orbit Valve
Co. plc. [1994] 1 W.L.R 1515.
31. Ailsa Craig Fishing Co. Ltd. v Malvern Fishing Co. Ltd. [1983] 1 W.L.R 964 per Lord Wilberforce at 966; George
Mitchell v Finney Lock Seeds [1983] 2 A.C. 803; BHP Petroleum v British Steel [2000] 2 All E.R. 133. cf. the approach
taken by the High Court of Australia in Darlington Futures Ltd. v Delco Australia Pty. Ltd. (1986) 161 C.L.R. 500; John
Kidd, Exclusion and Limitation Clauses in the Australian High Court, The Modern Law Review 50, no. 7 (November
1987): 952.
32. Other loss or damage includes property damages and financial loss: Robinson v P.R. Jones (Contractors) Ltd. [2011]
3 W.L.R. 815.
33. Dealing as a consumer is defined in UCTA 1977 s. 12 and clarified by the Court of Appeal in R. & B. Customs
Brokers Co. Ltd. v United Dominions Trust Ltd. [1988] 1 W.L.R. 321 although not without criticism esp. cf. the same
courts definition of in the course of a business in Stevenson v Rogers [1999] 2 W.L.R. 1064. The argument to harmonize
these two seemingly apposite definitions was rejected in Feldarol Foundry plc. v Hermes Leasing (London) Ltd. (2004)
101 (24) L.S.G. 32.
34. UCTA 1977 s. 6, s. 7, s. 12; SGA 1979 ss. 13-15; SGSA 1982 s. 2; Southwark London Borough Council v IMB U.K. Ltd.
[2011] 135 Con. L.R. 136.
35. A distinction reflected in the case law: Granville Oil and Chemicals Ltd. v Davies Turner and Co. Ltd. [2003] 1 All E.R.
819; Watford Electronics Ltd. v Sanderson CFL Ltd. [2001] IP & T 588.
36. UTCCR reg. 5(1).
37. See above n. 11; cf. Stewart Macaulay, Non-Contractual Relations in Business: A Preliminary Study, American
Sociological Review 28, no. 1 (February 1963): 55.
38. See; Stewart Macaulay, The Real and the Paper Deal: Empirical Pictures of Relationships, Complexity and the
Urge for Transparent Simple Rules, The Modern Law Review 66, no. 1 (January 2003): 44; Hugh Collins, Regulating
Contracts (Oxford: Oxford University Press, 1999) cf. Alan Schwartz and Robert Scott, Contract Theory and the Limits
of Contract Law, Yale Law Journal 113 (November/December 2003): 541; John Gava and Janey Greene, Do We Need
a Hybrid Law of Contract? Why Hugh Collins Is Wrong and Why It Matters, The Cambridge Law Journal 63, no. 3
(November 2004): 605.
39. J. R. Spencer, Signature, Consent, and the Rule in LEstrange v. Graucob, The Cambridge Law Journal 32, no. 1 (April
1973): 104.
40. Hartog v Colin & Shields [1939] 3 All E.R. 566.
41. Spencer, Signature, Consent and the Rule in LEstrange v. Graucob, at 115.
42. Matthew Chapman, Common Law Contract and Consent: Signature and Objectivity, Northen Island Legal Quarterly
49, no. 4 (Winter 1998): 364; this is the case in Canada where notice is required in consumer contracts: Tilden Rent-ACar Co. v Clendenning (1978) 83 D.L.R. (3d) 400. Toll Pty. Ltd. v Alphapharm Pty. Ltd. (2004) 211 A.L.R. 342 per Gleeson
CJ at 54.
43. P.S. Atiyah, Form and substance in Legal Reasoning: The Case of Contract, in The Legal Mind: Essays for Tony
Honor, ed. N MacCormick and P.B.H. Birks, at 34 (Oxford: Clarendon Press, 1986); Peekay Intermark v Australia & New
Zealand Banking Group [2006] 2 Lloyds Rep. 511 per Moore-Bick LJ at 543.
44. Indeed this reasoning was adopted by the High Court of Australia in Toll Pty. Ltd. v Alphapharm Pty. Ltd. (2004) 211
A.L.R. 342.
45. George Mitchell (Chesterhall) Ltd. v Finney Lock Seeds Ltd. [1983] 2 A.C. 803 per Lord Bridge at 816.
46. It is important therefore that our conclusion on the particular facts of this case should not be treated as a binding
precedent in other cases where similar clauses fall to be considered Phillips Products Ltd. v Hyland [1987] 1 W.L.R.
659 per Slade LJ at 669.
47. Thompson v T. Lohan (Plant Hire) Ltd. [1987] 1 W.L.R. 649 cf. Phillips Products Ltd. v Hyland
48. Ellison, Quantitative Survey of Consumers Appendix D to Consumer Contracts Report, at 13.