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Fine Print - Contractor bound by unread terms in contract. |
The recent case of a pharmaceutical supplier bound by the courts to the terms of a contract it had neglected to read is a salutary reminder of the need to always read the fine print and never sign a contract till you have had proper legal advice. |
In this case, company A was a supplier of flu vaccine to customers across Australia through a sub-distribution arrangement with the drug's South Pacific distributor. The distributor's Australian subsidiary, company B, looked after the collection, storage and regulatory approval for the vaccine. |
Company B had arranged for the vaccine to be stored at transport company C's warehouse in Sydney, then delivered across Australia. However, the operations manager of company B had failed to read the conditions of contract on the back of the transport company's credit form. |
The conditions included that customers and their associates, not the transport company, were responsible for any loss or damage and for taking out insurance. |
After the transport company collected over 70,000 doses of vaccine from the airport, company A inspected the goods at the warehouse. When temperature monitors were inserted, most of the drugs had to be rejected because they had become too cold and could not be used. |
Company A took the position that conditions on the credit application form were not part of the contract, but the High Court decided they were, and that company B was acting as company A's agent in contracting for the services of the transport company. |
The Court reaffirmed that a party which has signed a written contract is bound by its terms, whether it has made itself aware of them or not. |
The court explained that the rights and liabilities of parties to a contract are determined by what a reasonable person would understand them to mean, not by the understanding of the parties themselves. |
paul.clark@cmlawyers.com.au
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