Harsco Infrastructure Services Ltd v Bellway Homes Ltd

Whether contractual terms are incorporated by a signed document depends on the document’s objective contractual effect, assessed in its commercial context. The court may consider the document’s nature, purpose and the circumstances in which it was signed. The inquiry is not mechanistic. A document signed principally to trigger payment may nevertheless incorporate contractual terms where a reasonable person in the signatory’s position would understand that consequence. The court must still identify which terms were incorporated and when.

Harsco supplied scaffolding for Bellway’s housing development. After work had begun, the parties exchanged quotations, orders and standard terms. Harsco claimed the cost of scaffolding damaged by fire and relied on clause 8 of its standard terms.

The issue was whether clause 8 had been incorporated into the contract before the fire. The court considered the effect of the parties’ conduct, the later signed sub-contract order, and the circumstances in which that document was signed to secure payment.

1. Claim dismissed. Bellway was not liable because clause 8 of Harsco’s standard terms was not incorporated into the contract at the time of the fire.
2. The court applied the principle discussed in Grogan v Robin Meredith Plant Hire [1996] CLC 1127: incorporation depends on whether the document, viewed objectively, was one which contained or was expected to contain contractual conditions, or otherwise purported to have contractual effect. The approach is not mechanistic.
3. The court may examine the nature and purpose of the document and the circumstances in which it was signed. A document used administratively or as a payment trigger does not automatically lack contractual effect.
4. On the facts, the signatory appreciated that signing the sub-contract order would incorporate the terms stated in it, despite his primary motive being to trigger payment. The parties’ agreement had initially arisen through acceptance by conduct of the quotation, followed by an effective variation of terms through the later documentation and correction of the description from “lump sum” to “fixed”.
5. That analysis did not establish incorporation of clause 8 at the relevant time. The claim therefore failed.