Rohlig (UK) Ltd v Rock Unique Ltd

A commercial term requiring payment without set-off preserves a customer’s right to dispute sums that have not fallen due. A dispute about part of an invoice does not prevent the undisputed balance from being due.

A contractual time-bar expressed to discharge all liability may extinguish substantive liability, including an undiscovered restitutionary claim arising from overpayment. Its reasonableness is assessed under the Unfair Contract Terms Act 1977 by reference to the circumstances when the contract was made. Standard conditions negotiated between industry representatives and used between experienced commercial parties are likely to represent a fair balance, especially where alternative suppliers are available.

Röhlig, a freight forwarder, obtained summary judgment for £100,000 in respect of charges for arranging the transport of imported stone. Rock alleged that Röhlig had acted as its agent, had overcharged it and was liable on a substantial counterclaim.

The London Mercantile Court held that the parties’ contract incorporated standard British International Freight Association conditions. Clause 21(A) required payment without set-off, while clause 27(B) discharged liability unless proceedings were brought within nine months. Both clauses were held reasonable under the Unfair Contract Terms Act 1977.

Rock appealed against the construction and enforceability of those clauses and the restriction of its defence to its agency case. It also argued that further evidence might emerge at trial.

1. Appeal dismissed. Clause 21(A) required payment without deduction of sums that were due. It did not prevent a customer from disputing whether a sum had fallen due or from pursuing a separate claim. A dispute concerning part of an invoice did not render the whole invoice not due. The judge had allowed for the disputed charges and entered judgment only for the £100,000 which was indisputably payable.
2. The finding that clause 21(A) was reasonable under the Unfair Contract Terms Act 1977 was fully justified. Rock was a commercially experienced business, had previously dealt with Röhlig, could be expected to know that Röhlig used the standard conditions and had access to competing freight forwarders. Conditions negotiated between representatives of suppliers and customers were likely to represent a fair balance. An appellate court should respect a trial judge’s assessment of reasonableness unless it proceeded on an erroneous principle or was plainly wrong, applying George Mitchell (Chesterhall) Ltd v Finney Lock Seeds Ltd [1983] 2 A.C. 803.
3. Clause 27(B) was a substantive discharge of liability, rather than merely a procedural bar. Its broad language encompassed liabilities that were unknown when the nine-month period expired. It therefore extinguished restitutionary liability for overpayments made before 2 June 2008, including overpayments caused by accounting errors or a misunderstanding of the contract. The clause probably did not extend to the company’s own fraud, but no fraud was pleaded or evidenced. Aries Tanker Corporation v Total Transport Ltd (The ‘Aries’) [1977] 1 W.L.R. 185 and Granville Oil & Chemicals Ltd v Davis Turner & Co Ltd [2003] 2 Lloyd’s Rep. 356 were applied.
4. Clause 27(B) was also reasonable. Although reasonableness must be assessed separately in each case, courts should avoid fine distinctions between broadly similar commercial cases involving the same standard condition. The consumer-focused Unfair Terms in Consumer Contracts Regulations 1999 provided no assistance.
5. Rock had no real prospect of establishing that a principal freight forwarder agreed to charge no more than its own costs. Nor could speculation that helpful documents might emerge on disclosure defeat summary judgment. A defendant relying on unavailable evidence must show that it is likely to become available by trial. Moore-Bick LJ gave the judgment; Aikens and Sedley LJJ agreed.

1. Court of Appeal (Civil Division): The appeal was dismissed. The summary judgment and conditional permission to defend ordered below were left undisturbed.
2. London Mercantile Court: His Honour Judge Mackie QC granted Röhlig summary judgment for £100,000 and required Rock to pay £24,617.96 into court as a condition of defending the balance on its agency case.