A clause in a shipping freight contract using the standard British International Freight Association terms disallowing a set-off was not unreasonable. The clause read ‘The customer shall pay to the company in cash or as otherwise agreed all sums immediately when due, without reduction or deferment on account of any claim, counterclaim or set off’. The plaintiffs had carried goods for the defendants over many years, and where a query had arisen had accepted that money was withheld until the issues was resolved. Included in their duties had been payment of some customs duties. The defendant claimed that they had not made certain reclaims leading to losses, and sought an equitable set off under the 1981 Act.
Held: In the circumstances, the clause satisfied the requirement of reasonableness. ‘The clause was in common use and well known in the trade following comprehensive discussions between reputable and representative bodies mindful of the considerations involved. It reflects a general view as to what is reasonable in the trade concerned. ‘
Judges:
Lord Justice Nourse, Lord Justice Pill And Lord Justice Thorpe
Citations:
Gazette 18-Mar-1998, Times 26-Feb-1998, [1998] EWCA Civ 234
Statutes:
Unfair Contract Terms Act 1977 3, Supreme Court Act 1981 49
Jurisdiction:
England and Wales
Citing:
Cited – Aries Tanker Corp v Total Transport Ltd; The Aries HL 1977
Claims for freight charges are an exception to the general rule that all claims between parties must be resolved in one action. A claim for freight cannot be a claim ‘on the same grounds’ as a counter-claim for loss or damage arising out of the . .
Cited – R W Green Ltd v Cade Bros Farms 1978
Seed potatoes were sold. They were infected with a virus which could not be detected by inspection. The buyers claimed to set off against the cost of the seed potatoes a counter-claim against the sellers for the defective seed. They relied on the . .
Cited – Stewart Gill Ltd v Horatio Myer and Co Ltd CA 1992
The ‘guidelines’ in Schedule 2 are usually regarded as of general application to the question of reasonableness under the 1977 Act. The effect of s13 which deals with exemption clauses, is to apply s3 inter alia to ‘no set off’ clauses. The . .
Cited – The Teno 1977
The court considered the circumstances necessary to establish a right to a set-off in equity: ‘where the cross-claim not only arises out of the same contract as the claim but is so directly connected with it that it would be manifestly unjust to . .
Cited – George Mitchell (Chesterhall) Ltd v Finney Lock Seeds Ltd CA 29-Sep-1982
The buyer bought 30lbs of cabbage seed, but the seed was not correct, and the crop was worthless. The seed cost pounds 192, but the farmer lost pounds 61,000. The seed supplier appealed the award of the larger amount and interest, saying that their . .
Cited – George Mitchell (Chesterhall) Ltd v Finney Lock Seeds Ltd HL 1983
A seedsman sought to rely upon an exclusion clause preventing any claim by a purchaser by way of set off against its sales invoices. The House was asked whether a contractual term was ‘fair and reasonable’ within the meaning of section 55 of the . .
Applied – Singer Co (UK) Ltd v Tees and Hartlepool Port Authority 1988
The court upheld under the 1977 Act a clause which limited a port authority’s liability to andpound;800 per ton of consignment. Other factors were relevant but ‘The way in which the port authority’s general conditions came into being seems to me to . .
Cited by:
Cited – Overseas Medical Supplies Limited v Orient Transport Services Limited CA 20-May-1999
The appellant challenged a finding that it was responsible for the loss of medical equipment being transported from Tehran to the UK, and of failing to insure it as required, the contractual term exempting it from responsibility being an . .
Lists of cited by and citing cases may be incomplete.
Contract
Updated: 08 April 2022; Ref: scu.143712