Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd

General notice of printed conditions does not incorporate a particularly onerous or unusual term. The party relying on such a term must take reasonable steps to bring that particular term fairly to the other party’s attention before or when the contract is made. The notice required increases with the term’s burden or unusual character.

An exceptional daily holding charge, buried among ordinary conditions without emphasis, was therefore not incorporated. The recipient’s failure to read the term was not decisive. The relevant question was whether the supplier had given adequate notice of it.

Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd concerned 47 photographic transparencies supplied with a delivery note. Condition 2 imposed a holding fee of £5 plus VAT per transparency for each day beyond a 14-day return period. The transparencies were returned late, producing an invoice for £3,783.50.

The Lambeth County Court entered judgment for the plaintiff for that amount. It alternatively assessed reasonable remuneration at £3.50 per transparency per week after 14 days. The defendant appealed, contending that condition 2 had not been incorporated.

The central issues were when the contract was formed and whether the unusual and exceptionally burdensome charge had been fairly brought to the defendant’s attention.

1. Disposition. The Court of Appeal unanimously allowed the appeal. Condition 2 was not incorporated into the contract. The award based on that condition was replaced by the County Court’s alternative assessment on a quantum meruit.

2. Formation. Dillon LJ and Bingham LJ agreed that the initial telephone request was only a preliminary enquiry. No contract arose merely from delivery before the package was opened. The contract was formed when the defendant, having opened the package and received both the transparencies and delivery note, communicated its acceptance by telephone.

3. Notice of an onerous term. Dillon LJ held that the ordinary notice principles derived from Parker v South Eastern Railway Co [1877] 2 C.P.D. 416 required development for modern printed conditions. Where one condition is particularly onerous or unusual, the party seeking to enforce it must show that the particular condition was fairly brought to the other party’s attention. General notice of a set of conditions may be insufficient. The nature of the term determines the degree of notice required.

   This principle was not confined to exemption clauses or clauses removing statutory rights. Dillon LJ applied the reasoning in Thornton v Shoe Lane Parking Ltd [1971] 2 QB 163 and approved the well-known notice observation in J Spurling Ltd v Bradshaw [1956] 1 WLR 461.

4. Application. Condition 2 imposed a charge many times greater than the usual market rate and could create an inordinate liability from a short delay. Nothing specifically directed the defendant’s attention to it. It appeared without emphasis among four columns of conditions at the foot of the delivery note. It therefore never became a contractual term.

5. Fair dealing. Bingham LJ agreed. He observed that English law has no overriding contractual principle of good faith, but has developed piecemeal responses to unfairness. The notice authorities require attention to the transaction, the parties, the particular term and whether it is fair in all the circumstances to hold the recipient bound.

6. Penalty issue. The court did not decide whether condition 2 was an unenforceable disguised penalty. That issue had not been raised below or in the notice of appeal. The court therefore assumed that the clause would have been enforceable had it been fully and fairly brought to the defendant’s attention.

• Court of Appeal: In Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd [1987] EWCA Civ 6, reported at [1989] QB 433, the court unanimously allowed the defendant’s appeal and substituted the County Court’s alternative quantum meruit assessment.
• Lambeth County Court: Judge Holroyd QC entered judgment for the plaintiff for £3,783.50 with interest and costs under condition 2. He alternatively assessed reasonable remuneration at £3.50 per transparency per week after a 14-day period.