case in brief: Jardboranir HF trading as Iceland Drilling v Summit Hydraulic Solutions Ltd 690
- Victoria Whitfield
The High Court decision in Jardboranir HF trading as Iceland Drilling v Summit Hydraulic Solutions Ltd emphasises the reluctance of courts to strike down exclusion clauses in the context of international commercial contracts and the importance of reading the fine print.
Facts
Iceland Drilling commissioned Summit Hydraulic Solutions Ltd (Summit) to undertake service and repair work on one of Iceland Drilling’s geothermic drilling rigs, Tyr.
Summit provided substandard work which caused Iceland Drilling damage of $1.3 million. Iceland Drilling sought to recover the full amount from Summit, but Summit argued that Iceland Drilling was limited to recovering $46,444 due to the limitation clause in the terms of trade contained in Summit’s “Application for Credit Account” form (credit application form).
It was standard practice for Summit to require a party to sign and return its credit application form before commencing works. The document was a double-sided single page, with the first page containing an “Application for Credit Account”, and the reverse containing Summit’s terms of trade.
The administration staff at Iceland Drilling had printed out the document as two single sided pages. Only the first page was ever shown to the New Zealand representative, of Iceland Drilling, Mr Gudmundsson, who never saw or signed the second page of the document which contained the terms of trade.
Iceland Drilling argued that its return of the credit application form, with only the first page signed, did not constitute acceptance of Summit’s terms of trade, because Iceland Drilling had never seen or signed the second page containing the terms of trade. In support of this argument it relied on the admonition at the foot of the second page which stated: NB: APPLICATION MUST BE SIGNED AS REQUESTED ON P1 & P2
Iceland Drilling argued that the return of the form with only the first page signed ought to be considered as an offer to commence work on partial acceptance of Summit’s initial form.
Decision
The High Court held that Iceland Drilling was bound by the limitation clause in the terms of trade because it had signed a Declaration on the first page of the credit application form.