Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd: CA 12 Nov 1987

Incorporation of Onerous Terms Requires More Care

Photographic transparencies were hired out to the advertising agency defendant. The contract clauses on the delivery note included a fee which was exorbitant for the retention of transparencies beyond the set date.
Held: The plaintiff had not managed to include the terms in the contract, which was only made when the deivery was received. Damages on a quantum meruit were substituted. Where a party wishes to incorporate particularly onerous or unusual conditions, it is necessary to do something to draw the attention of the other party to those conditions. A delivery of goods at the request of a potential customer may constitute an offer to supply the goods, which the customer accepts by keeping the goods. There should be no over-arching principle of good faith, but rather piecemeal solutions in response to demonstrated problems of unfairness.
Lord Justice Dillon said: ‘It has to be said, however, that the holding fee charged by the plaintiffs by condition 2 is extremely high and in my view exorbitant . . It would seem therefore that the defendants would have had a strong case for saying that condition 2 was void and unenforceable as a penalty clause; but that point was not taken in the court below or in the notice of appeal.’
Lord Justice Bingham described ‘an overriding principle’ recognised by the law of obligations ‘in many civil law systems, and perhaps in most legal systems outside the common law world’ that ‘in making and carrying out contracts parties should act in good faith’.
However English law recognised no such principle: ‘English law . . . has developed piecemeal solutions in response to demonstrated problems of unfairness. Many examples could be given. Thus equity has intervened to strike down unconscionable bargains. Parliament has stepped in to regulate the imposition of exemption clauses and the form of certain hire-purchase agreements. The common law also has made its contribution, by holding that certain classes of contract require the utmost good faith, by treating as irrecoverable what purport to be agreed estimates of damage but are in truth a disguised penalty for breach, and in many other ways.’
The defendant was to be relieved of the liability imposed by the standard terms sought because the plaintiff had not done ‘what was necessary to draw this unreasonable and extortionate clause fairly to [the defendant’s] attention’.
But ‘In reaching the conclusion I have expressed I would not wish to be taken as deciding that condition 2 was not challengeable as a disguised penalty clause. This point was not argued before the judge nor raised in the notice of appeal. It was accordingly not argued before us. I have accordingly felt bound to assume, somewhat reluctantly, that condition 2 would be enforceable if fully and fairly brought to the defendants’ attention.’

Dillon and Bingham LJJ
[1989] QB 433, [1998] 1 All ER 348, [1987] EWCA Civ 6
lip, Bailii
England and Wales
CitedHood v Anchor Line (Henderson Bros) Ltd HL 1-Jul-1918
An English court may exercise its jurisdiction in personam over the liquidator to enforce the contract between the chargee and the company, and may require the liquidator to pay the proceeds to the chargee, The Scottish courts did not recognise the . .
CitedMcCutcheon v David MacBrayne Ltd HL 21-Jan-1964
The appellant had asked his brother-in-law to have a car shipped from Islay to the mainland. The appellant had personally consigned goods on four previous occasions. On three of them he was acting on behalf of his employer; on the other occasion he . .
CitedParker v South Eastern Railway Co CA 1877
The plaintiff took a parcel to a railway company depot for delivery, and received a ticket on which were printed conditions including a disclaimer. On the front of the ticket were printed the words ‘see back’. The jury was asked only if they . .
CitedSpurling (J ) Ltd v Bradshaw CA 1956
A person will not be bound by terms of a contract of which he has not received reasonable notice. Denning LJ: ‘I quite agree that the more unreasonable a clause is, the greater the notice which must be given of it. Some clauses which I have seen . .
CitedThornton v Shoe Lane Parking Ltd CA 18-Dec-1970
The claimant had suffered damage at the defendant’s car park. The defendant relied upon an exemption clause printed on the ticket, and now appealed against rejection of its defence under the clause.
Held: The appeal failed. The more extreme an . .

Cited by:
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The court considered whether a clause in an employment agency’s terms and conditions amounted to a penalty and was unenforceable. The contract provided that if the offer was withdrawn by the eventual employer after acceptance but before the . .
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CitedBankway Properties Ltd v Penfold-Dunsford and Another CA 24-Apr-2001
A grant of an assured tenancy included a clause under which the rent would be increased from pounds 4,680, to pounds 25,000 per year. It was expected that the tenant would be reliant upon Housing Benefit to pay the rent, and that Housing Benefit . .
CitedGreen v Petfre (Gibraltar) Ltd (T/A Betfred) QBD 7-Apr-2021
Onerous Contract Terms Unclear – Not Incorporated
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Lists of cited by and citing cases may be incomplete.


Leading Case

Updated: 01 November 2021; Ref: scu.177484