Contract terms didn’t prevent damages claim over mouldy meat

A food storage company could not use a trade body’s general terms as a way of avoiding a compensation claim from a customer as they had not been incorporated into their contract.

Selina Gonzalez Solicitor in our dispute resolution team reports on this recent case.

The case involved Scotbeef Ltd and D&S Storage Ltd (In Liquidation).

In 2017, Scotbeef arranged for some of its meat to be stored by D&S.

There was no written contract between them.

D&S sent weekly storage invoices. In the first few invoices, it included a statement that it traded on the terms and conditions applied by the United Kingdom Warehousing Association (UKWA).

It then became a member of the Food Storage and Distribution Federation (FSDF) and alleged that its employee had informed Scotbeef by telephone that the FSDF terms applied to their contract going forward.

The FSDF terms provided a nine-month time-bar for claims and limited the recoverable damages.

In October 2019, D&S transferred six pallets of meat which contained mould. In April 2020 an inspection found that over 100,000kg was unfit for human or animal consumption.

Scotbeef brought a claim for damages for the spoiled meat.

D&S denied liability and asserted that because of the incorporation of the FSDF terms into the contract, the claim was time-barred nine months after October 2019 and its liability was limited. 

It submitted that the FSDF terms were standard industry terms and had been incorporated into the contract by notice. 

The High Court rejected that argument and found in favour of Scotbeef.

It held that contract terms could be incorporated by a signed written document, by sufficient notice of the terms, and by course of dealing. If the course of dealing was relied on to imply terms, the terms would also have to be necessary for business efficacy.

That was not the case here. The FSDF terms were not standard within the industry.

The FSDF was a new group in 2016 and the single contract between the parties had been agreed in 2017. There was no other information about the FSDF or other trade organisations in the industry, nor what terms were used by each body.

There were numerous differences between the FSDF terms and the UKWA terms. D&S had not met the burden of proving that the FSDF terms were standard and Scotbeef was therefore entitled to sue for damages.

If you would like more information about the issues raised in this article please contact Selina on 01228 516666 or click here to send her an email.