Often suppliers think that the best thing to do with onerous clauses is to bury them deep within their terms and conditions (T&Cs) to not spook potential customers from entering into the contract!
There is then the assumption that if a party was silly enough to sign up to the contract they are, therefore, obliged to accept the liability of the onerous terms, right?
Those terms may not have been successfully incorporated into the contract by the supplier, meaning they do not form part of the contract and are not binding.
In this case, BS sued BCL, a social care provider, for cancellation charges (an eye watering £180,000 plus VAT) under a contract relating to the supply of a mobile network service following the cancellation of an order form by BCL.
The contract between the parties consisted of an order form that attempted to include Blu-Sky’s standard terms of conditions by stating that all orders and contracts were subject to and incorporated their terms and conditions.
The terms and conditions consisted of just over one page of text in closely spaced small type, and the relevant cancellation clause was ‘hidden away in the middle’.
The initial Court thought that the terms were not user-friendly to any reader, let alone a non-legal reader and the High Court agreed, deciding that whilst the terms and conditions were incorporated into the contract, the cancellation clause was not and so BS could not recover the cancellation charges.
So what you should you do in practice in making sure that a clause like this could in fact be relied upon?
Well tops would include:
- Being clear and simple with your terms and conditions, so they are reasonably easy to read;
- If linking to a set of terms and conditions that are then available on your website, make it clear at the start of each set of terms and conditions what services they relate to;
- Make sure that your terms and conditions have the both date when they were produced, and the date they were uploaded onto your website;
- If you impose an onerous condition on the other party, you have then to explain the purpose of the clause and/or give a warning. You cannot just refer the party to the terms and conditions, you need to actually bring the onerous clause to their attention. A top tip would be to put it in bold and refer to it at the beginning of the document.
- If your terms and conditions are fairly short (e.g. one page), best practice is to provide them to the other party along with the relevant order form or contract. There is no point sending the other party a hunt around your website for the right terms, why not just send them a copy?
In conclusion, determination of how onerous a clause is can never be an exact science. The following are examples of clauses that the Courts have held to be onerous:
- A clause that requires a purchaser of defective goods to return them at its own expense; and
- The imposition of excessive transfer and cancellation fees for customers seeking to switch contracts with mobile network suppliers.
Please get in touch if you need any help around this.
Regards to all and stay safe.