Key Facts
- •Dunelm Geotechnical & Environmental Ltd (claimant) hired Bray Cranes Ltd (defendant) to lift a drilling rig.
- •The crane lift damaged the pontoon and equipment, causing losses to Dunelm.
- •Liability was admitted, but the dispute centered on contract incorporation and quantification of losses.
- •Bray Cranes sought payment for crane hire, while Dunelm counterclaimed for losses.
- •The contract's limitation of liability clause (CPA terms) was the key contractual issue.
- •Dunelm argued that the CPA terms were not incorporated into the contract.
- •Multiple documents exchanged between the parties (quotation, purchase order, RAMS, method statement, on-site acceptance form) were considered for incorporation.
Legal Principles
Contractual terms are incorporated if a reasonable person would believe they govern the legal relations, based on acts and words.
Balmoral Group Ltd v Borealis (UK)
Sufficient notice of terms must be given before or at the time of contract conclusion; otherwise, they are ineffective.
Olley v Marlborough Court Ltd
Incorporation can occur through various ways, including a course of dealing.
Circle Freight International Ltd v Medeast Gulf Exports Ltd
For unusual or onerous terms, the party seeking to rely on them must show they were fairly and reasonably brought to the other party's attention.
Interfoto Picture Library Ltd v Stilleto Visual Programmes Ltd
Under UCTA 1977, a limitation of liability clause in standard terms must be reasonable to be effective.
Unfair Contract Terms Act 1977, s.3, s.11(1)
In assessing reasonableness under UCTA, Schedule 2 factors are considered, including bargaining power, inducement, and knowledge of terms.
Unfair Contract Terms Act 1977, Schedule 2
To terminate a contract for repudiatory breach, the innocent party must notify the other party of their election to terminate.
Damages are recoverable if the loss was reasonably foreseeable at the time of the contract, applying the rules in Hadley v Baxendale.
Hadley v Baxendale
Outcomes
The CPA terms were not incorporated into the contract.
Insufficient notice was given. The quotation did not clearly indicate that the contract was subject to the CPA terms, and the method statement did not incorporate them.
Bray Cranes was entitled to its hire charges for the first two days.
Dunelm did not terminate the contract after the accident; instead, they affirmed it by requesting Bray Cranes to remain on site.
Dunelm's claim for damages was largely successful.
The court assessed the damages for various heads of loss resulting from the accident, finding that they were reasonably foreseeable consequences of Bray Crane's negligence.
Dunelm's claim for loss of profit was unsuccessful.
The claim was not adequately substantiated, and the court could not assess it.