P4 Ltd v Unite Integrated Solutions Plc

Incorporation of standard terms requires reasonable notice of the conditions before contract formation. A reference to conditions on the reverse of a fax, where no terms are transmitted, is insufficient. Printing on the reverse of a posted quotation is also insufficient where the conditions are not referred to or otherwise drawn to the recipient’s attention.

For Sale of Goods Act 1979 section 25(1), a disposition may involve the transfer of a legal or equitable interest short of full title. Under a construction subcontract, contractual restrictions on removing unfixed goods may therefore constitute a disposition, although title passes only when the contractual payment conditions are satisfied. A general lump-sum valuation does not identify particular goods as paid for. Payment specifically covering the required materials can pass title when the goods are delivered to site.

P4 Limited supplied emergency-lighting equipment to Tudor Mechanical and Electrical Services Ltd for a development undertaken by Unite Integrated Systems Plc. Tudor became insolvent, leaving most of P4’s invoices unpaid.

P4 claimed damages for conversion, relying principally on an alleged retention-of-title clause. The court considered whether that clause formed part of the supply contracts, whether rights had been assigned to Abbey National, whether Unite obtained protection under section 25(1) of the Sale of Goods Act 1979, whether property vested under clause 21.4.5 of the DOM/2 subcontract, the effect of a September payment agreement, and whether three exit signs had been converted.

1. Contract terms. The January, August and September supply arrangements were simple offers and acceptances. Neither P4’s nor Tudor’s standard conditions was incorporated. The January fax quotation contained no conditions, the order’s reference to conditions overleaf was ineffective because no conditions accompanied the fax, and later documents did not provide sufficient notice. The retention-of-title clause therefore did not form part of any supply contract.
2. Assignment. If the clause had been incorporated, the factoring agreement assigned to Abbey National the invoice debts and related rights, including retention-of-title rights. When Abbey National’s rights in respect of the Tudor invoices ended, P4 acquired the right to sue for any conversion.
3. Disposition and vesting. Under section 25(1) of the Sale of Goods Act 1979, a disposition need not transfer full title. Clause 21.4.5 created an interest in the goods because, after delivery to or near the works, Tudor could not remove them without consent. That was a sufficient disposition, but title passed only on the contractual payment conditions. The amended Main Contract excluded listed off-site items from the relevant valuation mechanism. Clause 21.4.5.2 and .3 concerned unfixed goods delivered to, placed on or adjacent to the works.
4. A general lump-sum interim valuation was insufficient to identify particular goods as paid for. The September Agreement changed the method of payment but not its effect. Its payment of £190,000 covered the materials required for the subcontract works, including summer-letting requirements. Property in qualifying goods on site passed on payment, and property in goods delivered later passed on their delivery because payment had already been made.
5. Summer letting. The Main Contract requirement to comply with the intended summer letting use formed part of Tudor’s subcontract obligations through the incorporation provisions. No express repetition of the requirement in the subcontract was legally necessary.
6. Exit signs and orders. Three Type 830 fittings remained P4’s property and were incorporated by Unite. That was conversion despite Unite’s good faith. P4’s late amendments concerning contractual variation and a direct contract with Unite were refused because they were unsustainable or caused prejudice. P4 succeeded only for the three fittings, valued at £387; the remainder of the claim was dismissed. About 30 Klippa bulkhead units remained unfixed on 20 October 2003.