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Case Update: Contractual terms may be incorporated into an agreement by virtue of a web-link

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30 August 2021

CONTRACT
Terms – Reference – Terms of trade incorporated by reference in sales contract via web-link – Whether parties to contract bound by reference to other incorporated documents

Open Country Dairy Ltd v. Able Food Sdn Bhd
[2021] 7 CLJ 716, Court of Appeal
- see the grounds of judgment here

Facts Able Food Sdn Bhd (“Respondent”), a company incorporated in Malaysia, purchased instant whole milk powder from Open Country Dairy Ltd (“Appellant”), a company incorporated in New Zealand. Both parties entered into a sales contract between November 2016 and September 2017 (“Sales Contract”). In each of the Sales Contract, it contained a web-link at the bottom which the Appellant referred to as the “Terms of Trade”. During one batch of delivery of milk powder, the Respondent became aware that a substantial part of the delivery was defective. The Respondent proceeded to file a suit at the High Court against the Appellant for a breach of contract in supplying milk powder that was of unmerchantable quality. The Respondent claimed that they duly served the notice of writ on the Appellant in New Zealand, however the Appellant alleged that the notice of writ was not regularly served as it was inconsistent with s. 388 of New Zealand’s Companies Act 1993[1]. The Appellant further contended that their terms of trade were incorporated by reference in each of the Sales Contract via the web-link, in which the parties agreed that the forum for any dispute was in New Zealand and the parties submitted to the exclusive jurisdiction of the courts in New Zealand. The Appellant attempted to set aside the Respondent’s suit. The High Court dismissed the application on the grounds that the terms of trade were not applicable as there was no consensus on the terms of trade since the ‘modified terms were not attached to the Sales Contract. Hence, the present appeal. 

Issue Whether the terms of trade were incorporated by reference?

Held In allowing the appeal, the Court of Appeal held that the terms of trade are to be found in the web-link and formed part of the contract for the purchase of the instant whole milk powder. The Respondent did not click on or look up the web-link and it was held that this did not negate the terms of trade which are contained in the web-link and upheld its validity. It was held that the failure on the Respondent’s part to do so is akin to a contracting party not bothering to avail themselves of the terms, and to read and understand the same, with the benefit of legal advice or otherwise. As such, it was immaterial whether or not the Respondent had accessed the link. The Court of Appeal also held that there was no duty or obligation on the Respondent to furnish the Appellant with a copy of the terms of trade as the document was just a “click away”. In fact, if the Respondent faced any technical difficulty in downloading the terms of trade, they could have just approached the Appellant. Therefore, the Respondent was bound by the terms of trade as it was already incorporated by reference via the web-link as provided in each Sales Contract that was signed by the Respondent.

ZUL RAFIQUE & partners
{30 August 2021}
[1] Service of other documents on companies

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