Jefferies International Limited v Ashenden Finance SA

Standard terms may be incorporated into a contract through the parties’ words and conduct, even where the individual contract does not refer to them and there is no conventional course of dealing involving contractual documents. The question is whether the circumstances gave reasonable notice that the terms governed the parties’ dealings and whether the parties’ conduct objectively indicated acceptance.

Where intermediary provisions make the intermediary liable by default, disclosure of the principal must occur when the relevant instruction is given. Later disclosure does not retrospectively extinguish the intermediary’s primary liability. A separate undertaking to procure the principal’s performance may remain enforceable alongside obligations arising on default.

Jefferies claimed the price of Notes sold to Ashenden. Before settlement, the Notes were cancelled following a regulatory write-down connected with UBS’s acquisition of Credit Suisse, preventing delivery.

Ashenden challenged jurisdiction, contending that Jefferies’ Terms of Business had not been incorporated and that Ashenden acted only as an intermediary for Hyposwiss. It also sought strike-out under CPR r. 3.4(2)(a). Jefferies sought permission to amend its pleadings to address agency and an alleged breach of the Terms of Business.

The issues were whether the Terms of Business, including an exclusive English jurisdiction clause, were incorporated; whether the intermediary provisions relieved Ashenden of liability; and whether the proposed amendments had a realistic prospect of success.

1. Jurisdiction. The Jurisdiction Application was refused. Under CPR r. 6.33(2B), the relevant question was whether there was a good arguable case that the contract contained an English jurisdiction clause and that the claim fell within its scope. The test in Goldman Sachs International v Novo Banco SA [2018] UKSC 34, adopting the formulation in Brownlie v Four Seasons Holdings Inc [2018] 1 WLR 192, was satisfied.
2. Incorporation. The Terms of Business were plainly incorporated. Repeated communications stated that they governed the parties’ relationship and future services. The absence of reference to them in individual trade confirmations did not matter. Incorporation depends on the objective effect of the parties’ words and conduct, not on whether the terms appeared in a contractual document or were expressly accepted in a particular form. Circle Freight International Ltd v Medeast Gulf Exports Ltd [1988] 2 Lloyd’s Rep. 427 did not establish that a prior course of dealing was essential.
3. Agency and clause 5. On the evidence, there was a good arguable case that Ashenden had contracted as principal rather than as Hyposwiss’s agent. The phrase “otherwise acting on behalf of or for the benefit of” had to be read with the definition of Principal and clause 5 as a whole. It extended the clause to relationships having the substance of agency, not to every buyer acting for the commercial benefit of its customer.
4. Clause 5.1 made the intermediary liable by default. If the intermediary disclosed the principal’s identity when giving the relevant instruction, primary liability could rest with the principal alone, but the intermediary’s obligations under clause 5.3, including the obligation to procure performance, remained. Later notification after default did not extinguish primary liability. The Strike-out Application was therefore dismissed.
5. Amendment. The proposed alternative case based on clause 5.3.6 had a realistic prospect of success. The obligation to procure performance was freestanding and operated alongside clause 5.8. Permission to amend was granted.

This was a first-instance decision of the High Court. The judgment records no prior appellate decision.