Rooney & Anor v CSE Bournemouth Ltd

Whether standard terms are incorporated is a question of contractual construction. The court must ask what reasonable people in the parties’ position, with the relevant background knowledge, would understand the words to mean. Express words of incorporation are not essential. A reference to terms and conditions being available on request may, in an appropriate contractual and commercial context, reasonably indicate that existing terms apply to the contract and are available for inspection. At the summary-judgment stage, the question is only whether the proposed construction is reasonably arguable. Where terms are incorporated by construction, sufficiency of notice does not arise.

CSE Bournemouth carried out aircraft maintenance under a contractual framework with EBJ Operations and a related work order signed before the work began. The work order stated that terms and conditions were available upon request. After the aircraft was damaged, the claimants brought proceedings and CSE relied in its defence on its standard trading conditions.

On the claimants’ application for summary judgment under CPR 24.2, Simon J struck out the relevant parts of the defence. He held that the wording was insufficient to incorporate CSE’s standard conditions. CSE appealed. The central issue was whether the wording was reasonably capable of incorporating those conditions.

1. Appeal allowed. The relevant question was whether reasonable people in the position of the parties would understand the words “terms and conditions available upon request” as referring to contractual terms on which CSE agreed to perform the work. This applied the approach stated in Investors Compensation Scheme Limited v West Bromwich Building Society [1998] 1 WLR 896 at 916.
2. In context, the work order was intended to be a contractually binding order within an existing aircraft-maintenance framework. It activated the particular work, while the regulatory regime supplied technical requirements and left commercial terms to the parties. It was commercially unlikely that a contractor would formulate commercial terms but leave them for inclusion only if the customer requested them.
3. The wording was grammatically capable of that construction and, on the material then available, it was the more likely construction. The appeal was from an order striking out part of the defence, so the question was only whether CSE’s construction was reasonably arguable. Further evidence about the contractual framework and background remained possible.
4. Hedley J agreed, observing that the signed work order had to bear some meaning in the context of a contract expected to contain commercial terms. Arden LJ agreed with Toulson LJ and added that the absence of express incorporation words was not decisive.
5. Arden LJ further stated that sufficiency-of-notice principles did not apply if the terms were incorporated by the true interpretation of the parties’ contract. Incorporation by interpretation was analytically distinct from incorporation by notice.

Order: appeal allowed.

• Court of Appeal (Civil Division): appeal from the High Court of Justice, Queen’s Bench Division (Commercial Court), before Simon J. The Court of Appeal allowed CSE’s appeal against the striking out of parts of its defence.