“Onerous” term “buried” in T&Cs was not incorporated into a B2B contract

Blu-Sky Solutions Ltd v Be Caring Ltd [2021] EWHC 2619 (Comm)

The question

Is reference to T&Cs on a website sufficient to incorporate onerous terms into a contract?

The key takeaway

Suppliers must take sufficient steps to bring particularly onerous clauses to customers’ attention to validly incorporate them into the contract.

The background

Blu-Sky, a provider of mobile network services (MNS) contracted with Be Caring Ltd (BCL), a care home provider, to receive mobile phones and a contract for MNS provided by EE. Blu-Sky sent BCL an order form, which stated that it incorporated Blu-Sky’s standard T&Cs, and that, by signing the form, BCL had read, agreed and fully understood all T&Cs regarding the contract as shown on Blu-Sky’s website.

The T&Cs included a clause requiring BCL to pay a fee to Blu-Sky if it cancelled the order before connection – a total cancellation fee of £180,000 was payable if all the prospective connections were cancelled. After signing the order form, BCL sought to cancel the order. Blu-Sky brought a claim against BCL for £180,000 to enforce its rights under the cancellation clause.

BLC argued that: (1) the T&Cs were not incorporated into the agreement because signing and returning the order form was simply a step along the way to forming a contract with EE and therefore did not form a contract with Blu-Sky; and (2) even if the T&Cs were incorporated, the early cancellation clause was not incorporated given its onerous nature. 

The decision

The Court found that: 

• there was a binding contract between the parties
• the T&Cs were incorporated because: (a) they were accessible from Blu-Sky’s website by navigating to and clicking on the “terms and conditions – mobile” link; and (b) it would have been reasonably clear to BCL, had it accessed the website, that the relevant terms relating to mobile phones (as opposed a separate set of terms relating to landlines) were applicable to the present contract
• however, the cancellation clause was not incorporated because it was particularly onerous and was not fairly and reasonably brought to BCL’s attention
• the clause was particularly onerous because the cancellation fee bore no relationship to Blu-Sky’s actual costs or to any reasonable estimate of its loss resulting from BCL’s cancellation
• Blu-Sky had not fairly and reasonably brought the clause to BCL’s attention because it had made no attempt to explain to BCL that it would be exposed to very significant liability if it cancelled an order prior to connection. In fact, the clause was “cunningly concealed in the middle of a dense thicket which none but the most dedicated could have been expected to discover and extricate…”, and
• it was an unenforceable penalty clause because it was a secondary obligation that was out of proportion to Blu-Sky’s legitimate interest in enforcing BCL’s obligations under the contract.

Why is this important?

The decision highlights that where T&Cs are incorporated by reference into a contract, a clause that is “particularly onerous or unusual” will only be incorporated if it has been fairly and reasonably brought to the customer’s attention.

Any practical tips?

When incorporating T&Cs by reference to your website, ensure you call out any particularly onerous terms – eg by flagging them in the order form itself and ensuring they are clearly signposted in the T&Cs through use of clear headings, bold text, reference to terms at the outset, etc.