Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd [1987] EWCA Civ 6 (12 November 1987)

A photographic library sent transparencies with conditions including an unusually high holding fee of £5 per day per transparency. The defendants retained them beyond 14 days without reading the conditions. The Court of Appeal held that particularly onerous or unusual terms must be fairly brought to the other party's attention to be incorporated into a contract.

Facts

The plaintiffs operated a photographic transparency library. The defendants, an advertising company, telephoned requesting photographs of the 1950s. The plaintiffs sent 47 transparencies in a jiffy bag containing a delivery note with printed conditions. Condition 2 stipulated a holding fee of £5 plus VAT per day for each transparency retained beyond 14 days. The defendants did not read the conditions and failed to return the transparencies until 2nd April, having received them on 5th March with a return date of 19th March. The plaintiffs claimed £3,783.50 calculated under Condition 2.

The Delivery Note Conditions

The delivery note contained nine conditions printed across the bottom. Condition 2 stated:

“2. All transparencies must be returned to us within 14 days from the date of posting/delivery/collection. A holding fee of £5.00 plus VAT per day will be charged for each transparency which is retained by you longer than the said period of 14 days save where a copyright licence is granted or we agree a longer period in writing with you.”

Issues

The central issue was whether Condition 2, being particularly onerous and unusual, was incorporated into the contract between the parties. The court considered whether the plaintiffs had done enough to draw the defendants’ attention to this specific condition.

Judgment

Lord Justice Dillon

Dillon LJ held that the contract was formed when the defendants accepted the transparencies by telephoning the plaintiffs after opening the jiffy bag. He found Condition 2 to be “a very onerous clause” and noted the fee was exorbitant compared to industry standards (the judge below found a reasonable charge would be £3.50 per transparency per week).

Applying the principle from Thornton v Shoe Lane Parking Ltd, Dillon LJ stated:

“if one condition in a set of printed conditions is particularly onerous or unusual, the party seeking to enforce it must show that that particular condition was fairly brought to the attention of the other party.”

He concluded that nothing was done to draw the defendants’ attention particularly to Condition 2, which was merely one of many conditions printed across the foot of the delivery note. Consequently, Condition 2 never became part of the contract.

Lord Justice Bingham

Bingham LJ provided a broader analysis, noting that while English law has not adopted an overriding principle of good faith as found in civil law systems, it has developed piecemeal solutions to problems of unfairness. He traced the development through the ticket cases and subsequent authorities, observing that courts consider what is fair in all the circumstances.

He stated the crucial question as:

“whether the plaintiffs can be said fairly and reasonably to have brought condition 2 to the notice of the defendants”

Bingham LJ found that the plaintiffs did not do so. The condition contained a daily rate many times greater than was usual or heard of, resulting in a charge of £235 plus VAT per day for the 47 transparencies. He concluded:

“they are to be relieved because the plaintiffs did not do what was necessary to draw this unreasonable and extortionate clause fairly to their attention.”

Implications

This case established that where a term in standard conditions is particularly onerous or unusual, reasonable steps must be taken to draw that specific term to the other party’s attention. The more unusual or burdensome the term, the greater the degree of notice required. The case is significant for:

• Extending the ‘red hand’ rule from exemption clauses to any particularly onerous contractual terms
• Establishing that standard form conditions will not automatically be incorporated where individual terms are unusually harsh
• Providing guidance on fair dealing in commercial contracts without adopting a general good faith doctrine
• Demonstrating the common law’s piecemeal approach to addressing contractual unfairness

Verdict: Appeal allowed. The judgment against the defendants was reduced from £3,783.50 to a quantum meruit assessment based on a reasonable charge of £3.50 per transparency per week for retention beyond a reasonable 14-day period. Condition 2 was held not to be incorporated into the contract as the plaintiffs failed to fairly bring this particularly onerous term to the defendants’ attention.

Source: Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd [1987] EWCA Civ 6 (12 November 1987)