Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd [1987]
Court: Court of Appeal
Facts: Interfoto Picture Library Ltd sent 47 photographic transparencies to Stiletto Visual Programmes Ltd with a delivery note stating a holding fee of £5 per transparency for each day beyond fourteen days. Stiletto did not open the package or read the terms and returned the transparencies late. Interfoto then invoiced Stiletto for £3,783.50, which included the holding fees.
Issue: Whether the onerous holding fee term was incorporated into the contract between Interfoto and Stiletto, given that the term was not reasonably brought to Stiletto's attention.
Held: The Court of Appeal held that the holding fee term was not incorporated into the contract due to insufficient notice. The court awarded a small restitutory charge of £3.50 per transparency per week, reflecting fair market value.
Key Judicial Statements:
Dillon LJ: Affirmed that particularly onerous or unusual terms must be specifically brought to the other party's attention to be enforceable. He noted that the term in question was not effectively communicated, aligning with the "red hand" rule established in earlier cases like Spurling v Bradshaw. Dillon LJ stressed that reasonable notice is required for such terms, and the delivery note did not meet this standard.
Bingham LJ: Agreed that the clause was invalid due to its unreasonably stringent nature and emphasized the importance of fairness and good faith in contractual dealings. Although he refrained from definitively ruling on the issue of whether the clause could be challenged as a disguised penalty, he highlighted that English law's piecemeal approach to fairness aligns with the principles of good faith in contract formation.
💡 Leveluplaw: Highlights that particularly onerous terms require more explicit notice to be enforceable. This case extends the reasonable notice requirement beyond exemption clauses, underscoring the need for fairness and effective communication in contract terms. The decision reflects a broader approach to ensuring procedural fairness in contractual agreements.